Legal Question in Real Estate Law in California
Family member took out mortgage on MY house!
Hello, my house is titled in my name alone. One of my parents needed money and found a lender who wrote up a home equity loan on MY house. The lender knew house was in my name only.
My parent is the only borrower and the only person who signed the Promissory Note. But both me and my parent signed the Deed of trust. I have 2 concerns - 1. Am I responsible for repayment (such as if my parent dies)? Or is this an unsecured loan since I did not sign Promissory Note? 2. If I am not responsible for repayment, is it a better idea to get this loan removed from my house now?
3 Answers from Attorneys
Re: Family member took out mortgage on MY house!
The fact that you are not on the note is irrelevant. I assume you knew that the family member was using your home as collateral, because you would have had to sign (before a notary) the Deed of Trust (DOT). You are ultimately responsible because you put up your home as collateral. A Deed of Trust is security for the loan. If the Note is not paid (for whatever reason), the lender has security in your DOT and can likely foreclose if necessary. It is not an unsecured Note, because the DOT is the security. There is likely no way for you to "remove" this from being a cloud on title to your home absent cutting a new deal with the lender (whom I cannot imagine would be interested in doing so, unless replacement security was being provided).
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Re: Family member took out mortgage on MY house!
If I understand this correctly, you approved of this loan and lien by signing the deed of trust? If that is the case, then you gave your house as collateral for the loan.
JOEL SELIK
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Re: Family member took out mortgage on MY house!
Although you did not sign the note, you pledged your house as security, so if the note is not paid by your family member, they will foreclose on your house. You seem to think the fact that the house was only in your name somehow makes the broker responsible, but you signed the deed of trust, so you can hardly argue that anyone took advantage of you. For instance, I could borrow money and persuade my friend to use their house as collateral for my loan, and that would be perfectly legal, if my friend is foolish enough to allow me.