Lien Theory State and Mortgage Loan

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Icon Mini Profile harmless_fun





Joined: 12 Sep 2010

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Post Posted: Sun Sep 12, 2010 3:49 pm    Post subject: Lien Theory State and Mortgage Loan
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My wife's parents co-own a property in a state that is a "lien theory" state. I do not know what the survivorship designation is. One person has mortgaged the property to consolidate and refinance debts so that there is essentially one mortgage on the property (there might be a small HELOC with minimal borrowings). Only one person has signed the loan documents. The propery has zero equity with respect to the mortgage.

My question is, practically speaking, what remedy does the mortgage lender have with respect to a default (e.g. non-payment), does their lien attach only to one-half of the property? Can they interfere with a sale in which the other half of the property is sold free-and-clear?

The non-mortgaged joint owner would rather have "no obligation" to the lender or buy out the lender and co-owner for nominal settlement.
Icon Mini Profile adonis
adonis




Joined: 22 Oct 2005

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Location: ALASKA
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Post Posted: Sun Sep 12, 2010 8:51 pm    Post subject:
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Hi Guest,

The loan has been taken out using the whole property as a collateral. If the borrower defaults on the mortgage payments, then the lender can place a lien against the whole property. If a property is sold off, then the lien should be paid off first and then the rest of the amount will be divided amongst both of you.

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