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Maverick
Maverick, Attorney
Category: Bankruptcy Law
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Experience:  20 years of professional experience
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In layman terms, what does 7-111()(1)(2) mean?

Customer Question

In layman terms, what does 7-111(b)(1)(2) mean?
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  Maverick replied 1 year ago.
Welcome to Just Answer! My name is Maverick. I very much enjoy what I do and I hope that you will benefit from this information.
http://law.justia.com/codes/maryland/2013/article-ged/section-7-111
Just want to make sure that the question you are asking is about the law at the link above???
Customer: replied 1 year ago.

No the code is from

Real Property Article of the Annotated Code of Maryland

Expert:  Maverick replied 1 year ago.
§7-111.
(a) Subject to subsection (b) of this section, any change or modification to a mortgage or deed of trust or to an obligation secured by a mortgage or deed of trust does not extinguish the existing lien of the mortgage or deed of trust or otherwise adversely affect the existing lien priority of the mortgage or deed of trust.
(b) If the change or modification to a mortgage or deed of trust or to an obligation secured by a mortgage or deed of trust increases the principal sum secured by the mortgage or deed of trust above the amount appearing on the face of the mortgage or deed of trust and expressed to be secured by it:
(1) The existing lien priority of the original mortgage or deed of trust shall continue as to the principal sum secured by the mortgage or deed of trust immediately preceding the change or modification; and
(2) The lien priority for the increase in the principal sum shall date from the date of the changed or modified mortgage or deed of trust.
ANSWER:
Okay, thanks for the clarification on the correct statute at issue. All this is saying is that if you have a note on a house for example that you signed for 100K in 2009 and that note was secured by a lien in the home, then that 100k lien still hold priority and comes first in time over any subsequent lien.
So let's say that in 2013 you had some remodeling done on the home and a contractor put a 10k lien on the house for non-payment. Now, the 10K lien would hold second priority behind the 100K lien.
So, now let's say that in 2015 you refinanced the 100K loan and borrowed an additional 50k. As to the this 50k, there would be a third lien on the home for 50k that would come next in line after the 100k and the 10k.
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