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Barrister
Barrister, Lawyer
Category: Real Estate Law
Satisfied Customers: 35822
Experience:  16 years real estate, Realtor. Landlord 26 years
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We are co-owners of a second home. That home is being sold

Customer Question

We are co-owners of a second home. That home is being sold and we've recently been advised we are responsible for the mortgage our partners took on their portion. We did sign papers when they refied under HARP in 2012. We were told we had to sign to acknowledge that all the owners knew they were mortgaging their part. We didn't care as we had no mortgage on the property. Now that the price has dropped on the property and they are upside downwe are being held responsible. We have never been approved for a mortgage with this bank. We never provided any financial information and never had any paperwork. We'd never known anything about their loan until we received foreclosure papers. It was their business on their part of the property.... We thought. Any suggestions. It's messy as these are relatives also. We think it's the banks loss since they gave them a loan.
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Barrister replied 1 year ago.

Hello and welcome! My name is ***** ***** I will try my level best to help with your situation or get you to someone who can.

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If you signed off agreeing to allow the property to be used as collateral for the loan that the other owners took out, then that would encumber the property and would have to be paid off out of any sales proceeds in order to be able to convey clear title to the buyer. A property can't be conveyed if there is a debt on it as that is a cloud on the title.

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With that said, if you didn't cosign their loan as guarantors, and only to pledge the property as collateral, then you aren't personally responsible for their debt. But it would have to be paid off before the property could be transferred to the buyer.

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Unfortunately your recourse is to sue the other owners for the debt that you were essentially forced to pay on their behalf so that the property could be sold free and clear.

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I am very sorry that I don’t have better news, but please understand that I do have an ethical and professional obligation to provide customers with legally correct answers based on my knowledge and experience, even when I know the answer doesn’t make the customer happy...

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thanks

Barrister

Customer: replied 1 year ago.
Correct it is a tough pill to swallow , but we appreciate your insight and professional advice. It appears we are between the proverbial rock and hard spot!!! Thanks again so much K and J
Expert:  Barrister replied 1 year ago.

You are very welcome...even if the news is lousy...

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thanks

Barrister