Posted on: 16th Oct, 2009 11:56 am
We borrowed $175K from my father in law to put a down payment on a house. My husband was not allowed access to a trust fund that he has for the down - it was borrow it or nothing.
We signed a deed of trust with assignment of rents in April of 2005. My FIL filed it with the county in June of 2008.
We defaulted on the loan and a notice of default was filed in June of 2009. We would like to short sell the house, but obvoiusly, any potential transaction would not go through without that lien being released by my FIL.
What, if any, are the benefits of him NOT releasing the lien? Can he claim the loan as "bad debt" and write it off if the house goes into foreclosure and he never took the lien off? Can we be pursued in civil court for the debt?
Looking for an attorney to consult as well.
We signed a deed of trust with assignment of rents in April of 2005. My FIL filed it with the county in June of 2008.
We defaulted on the loan and a notice of default was filed in June of 2009. We would like to short sell the house, but obvoiusly, any potential transaction would not go through without that lien being released by my FIL.
What, if any, are the benefits of him NOT releasing the lien? Can he claim the loan as "bad debt" and write it off if the house goes into foreclosure and he never took the lien off? Can we be pursued in civil court for the debt?
Looking for an attorney to consult as well.
Just to clarify
You fahter in law gave 175K for down payment and he holds lein on the property
And you took a secodn laon for the rest and bought the house
Correct me if I am wrong
In this situation, if you defculted on the second lender then they will probably foreclose on the property and they will sell the property in an auction
Dependign on how much money ti is sold for and how much you owe the secodn lender will take his share first and pay the remaingin to the first lein holder ( I am assumgin the secodn lender amoutn is bigger than $175k)
So it is better if yoru fahter in law does not charge off this as a loss
You fahter in law gave 175K for down payment and he holds lein on the property
And you took a secodn laon for the rest and bought the house
Correct me if I am wrong
In this situation, if you defculted on the second lender then they will probably foreclose on the property and they will sell the property in an auction
Dependign on how much money ti is sold for and how much you owe the secodn lender will take his share first and pay the remaingin to the first lein holder ( I am assumgin the secodn lender amoutn is bigger than $175k)
So it is better if yoru fahter in law does not charge off this as a loss
Hi gnjemmett,
If your father in law does not release the lien, then it would be difficult to sell off the property. Buyer won't accept the property with a lien and they would ask you to pay off the lien immediately. As your father in law holds the lien, he can sue you for the debts. You should negotiate with your father in law and try to get a payment plan through which you would be able to pay off the dues.
If your father in law does not release the lien, then it would be difficult to sell off the property. Buyer won't accept the property with a lien and they would ask you to pay off the lien immediately. As your father in law holds the lien, he can sue you for the debts. You should negotiate with your father in law and try to get a payment plan through which you would be able to pay off the dues.