Legal Question in Real Estate Law in California

lien against a forclosing property

I ended up being a third in line to get my $155K loan secured by a condo in SF (orig $815 K). He let me know that he can't go on with payments and the balance against the condo (not including what he owes me) is $795K. Right now the property is not worth enough to cover all of it. How do I position myself so that if and when he comes into some $, I can force him to pay off his Promissary note (155+ 8%) that was secured by Deed of Trust on that forsaken condo.

Thank you!

Tatyana


Asked on 9/08/08, 8:28 am

1 Answer from Attorneys
Nina Ortega

Re: lien against a forclosing property

If you made the loan to facilitate your borrower's purchase of the property, you may be completely out of luck. Your only option would be to foreclose and start making the payments on the first and second liens yourself and hope the value goes up enough someday soon (don't hold your breath)so that you can sell and recoup your money. Not very palatable, I know.

If you did NOT make the loan to facilitate your borrower's purchase, just wait for the first or second lienholder to foreclose and wipe out your lien. That will convert you to an unsecured "sold out junior". You can then sue on the promissory note and obtain a money judgment against your borrower.

Your attorney can help you get the judgment recorded in every county where your borrower might now or in the future acquire real estate, and it will be become a lien against those other properties. Also, be sure to keep renewing the judgment on time to keep it alive.

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Answered on 9/08/08, 10:14 am


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