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LawTalk, Attorney
Category: Real Estate Law
Satisfied Customers: 37855
Experience:  I have 30 years legal experience. Additionally, in CA I held a Real Estate Broker's license.
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I am selling my house on a land contract. I let the purchaser

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I am selling my house on a land contract. I let the purchaser take out a home improvement loan as a lien on the property. If I get the house back, do I owe the principle on the loan or will I also owe the unpaid interest?

Good afternoon David,

I'm Doug, and I'm sorry to hear of the confusion. My goal is to provide you with excellent service today. In order to give you a clear and concise answer, I will need some additional information about the circumstances, please.

1. Were you a co-signor on the home improvement loan? Or did you merely consent to the buyer taking out the loan?

2. Whose name is XXXXX XXXXX presently in?


Customer: replied 4 years ago.

I was not a co-signor on the loan, but I did sign a subordination agreement making the land contract subordinate to the loan.

Good afternoon David,

Thanks for the additional information.

When you take the home back---presuming that the buyer voluntarily gives you a Quit Claim Deed---your possession of the property will be subject to the HELOC. And you should probably expect that the buyer, once they no longer own the property, will quit paying on the loan---leaving you to either pay it yourself, or face the possibility of foreclosure.

Legally, you won't owe the lender a dime. However, unless they are willing to work out a deal with you for less---they may demand payment in full on the terms of the loan in order to guarantee their removal of the lien on the property---and that would include all outstanding principal and interest---and whatever other charges the lender may have levied in conformance with the terms of the loan agreement. I'm sorry.

You may reply back to me again, using the Reply to Expert link, if you have additional questions.

I wish you the best in your future,

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