Legal Question in Real Estate Law in California

Re: Land lease

Loan companies are allowed to make mistakes.

Re: Land lease

There is no prohibition that I am aware of which would prevent a lender from making a loan where the collateral may not exist at the end of the loan. We see this frequently in manufactured home communities where the park is operated under a ground lease. In theory, at the end of the ground lease, the park may no longer exist, but the lender's loan continues for another two years (in the example you gave). This may have been a mistake in that nobody at the mortgage lender reviewed the ground lease to determine its remaining term, or it may be that they were willing to accept the fact that their loan will be unsecured for the last two years. In those last two years, the remaining principle balance will be fairly minimal (assuming it is a fully amortizing loan), and so they may have deemed the risk to be minimal. In either case, it does not modify your obligation to repay the entire loan.

*Due to the limitations of the LawGuru Forums, The Gibbs Law Firm, APC's (the "Firm") participation in responding to questions posted herein does not constitute legal advice, nor legal representation of the person or entity posting a question. No Attorney/Client relationship is or shall be construed to be created hereby. The information provided is general and requires that the poster obtain specific legal advice from an attorney. The poster shall not rely upon the information provided herein as legal advice nor as the basis for making any decisions of legal consequence.