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29. Is she likely to prevail?
The woman sued to compel the friend to convey the land to her.
At the end of the 10th year and after the loan had been repaid, the woman demanded that the friend deed the land back to her. The friend refused, claiming that he owned the land and that the payments the woman had made over the preceding 10 years were rent, not loan repayments.
A woman wanted to purchase a tract of land but could not immediately obtain a loan. Her friend agreed to loan her the entire purchase price if, immediately following the purchase, the woman would deed the land to him. They also agreed that the woman would have 10 years in which to repay the loan and that the friend would deed the land back to the woman when the loan was fully repaid. Lastly, they agreed that during the 10-year period the woman could live on the land. The deed to the friend did not refer to their agreement.
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A is incorrect. Based on the facts presented, there is no presumption, as a matter of law, that the transaction is a lease. The transaction between the woman and the friend is treated as an equitable mortgage since it accomplishes the parties' intent that the friend have a security interest in the land.
B is incorrect. The merger doctrine applies to contractual promises that relate to the quality of transferred title. However, in this case, the promises made by the parties relate to whether the parties intended that the conveyance transfer title to the friend or merely create a lien on the land. Therefore, the merger doctrine does not apply here.
C is incorrect. Whether or not the woman lived on the land is irrelevant to the characterization of the transaction as an equitable mortgage.