Legal Question in Real Estate Law in California

Re: Grant Deed

You hold title to the property! Assuming that the property is worth more than the existing loan encumbering it, you received the "equity", which is the difference between what a property is worth and the amount of loans on the property. The fact that the name of the borrower on the loan is not yours is irrelevant, as far as ownership. Naturally, if you do not want to lose the home, you have to make sure that the payments are made on the loan; if the lender who has a deed of trust on the property as security for its 396K loan does not receive the payments on the loan, they will foreclose regardless of who is the owner.

Re: Grant Deed

The effect of a home loan can perhaps best be understood by thinking of it as a debt of the house, not a debt of the borrower. While this isn't literally true, since people, not houses, write checks for mortgage payments, looking at it this way halps one to understand who is responsible and what happens in the event of a default in payments.

When a mortgage (or note secured by deed of trust) goes into foreclosure, the creditor causes the property to be sold, without regard to whose name is on the deed, and gets its repayment from the proceeds of sale. Only in somewhat unusual cases is it even possible for the lender/creditor to go after the person whose name is on title personally.

To put it another way, a home lender's recourse is to the home, and not to the borrower nor to the legal owner.

The occasional exceptions include (1)cases where the loan was not for purchase money and the foreclosure is not under a trustee's power of sale in a deed of trust (both conditions must be present), (2) where the person sued is a guarantor rather than the borrower, or (3) where the owner being sued has committed what is known as "waste" on the property, for example, has reduced the collateral value by logging off the valuable timber just prior to the foreclosure action.