§516-181  Interest acquired.  (a)  Upon
acquisition of the leased fee interest in a residential houselot from the
proceeds of an eligible loan, the property interest acquired shall be all of
the right, title, and interest of the fee owner and all legal and equitable
owners, if any, in and to the residential houselot acquired, subject to all
covenants, conditions, easements, reservations, and restrictions of record
running with the land or contained in the agreement of sale, deed, or other
conveyance held by the fee owner and legal and equitable owners.  The
acquisition of a leased fee interest in a residential houselot from the
proceeds of an eligible loan shall terminate all the right, title, and interest
of the fee owner and all legal and equitable owners, whether the interest be a
remainder, vested or contingent, a reversion, or other beneficial interest in
the property, present or prospective.



(b)  If the leasehold on property acquired from
the proceeds of an eligible loan is subject to any mortgage, lien, or
encumbrance suffered or permitted by the eligible borrower, including, but not
limited to, rights arising through divorce, marriage, or assignment, the
purchase of the leased fee interest in such residential houselot in no manner
shall affect or impair the mortgage, lien, or encumbrance or the security
afforded thereby to the holder thereof, and the leasehold shall continue,
notwithstanding the purchase of the leased fee interest in such residential
houselot by the eligible borrower, for the purposes and to the extent necessary
to avoid any impairment of leasehold security, unless the holder of the
mortgage, lien, or encumbrance on such leasehold and the corporation in writing
shall consent to the transfer thereof to the fee.  Upon the written consent by
the holder thereof and the corporation, each such mortgage, lien, or
encumbrance to which the leasehold is subject and to which such consent refers
shall be transferred to and shall bind the fee acquired by the eligible
borrower, and thereafter shall continue in full force and effect as a mortgage,
lien, or encumbrance of the fee acquired by the eligible borrower, in the same
order and priority among such mortgages, liens, and encumbrances so transferred
to the fee as the same applied to and bound the eligible borrower's immediate,
previous leased fee interest. [L 1983, c 270, pt of §1; am L 1987, c 337, §16;
am L 1988, c 104, §2; am L 2005, c 196, §26(b); am L 2006, c 180, §16]