Legal Question in Real Estate Law in California

Re: Real Estate HELOC

Yes, in theory, but in practice no.

Re: Real Estate HELOC

Reputable lenders want a policy of title insurance when they take a property as security for a loan and any title company will want all owners of the property to sign for the loan.

Re: Real Estate HELOC

The interest of a part owner can be put up as collateral, but if the lender has to foreclose, all it can get is the part owner's interest, and thus the collateral value is very poor. Most reputable lenders would not accept a part interest in real property as collateral unless it is a major oilfield or a Manhattan high rise or Vegas casino.

If your brother made an honest application and it was granted and he got the loan, and the papers were properly drawn up and recorded, the HELOC would be secured by the borrower's part interest, and the lender could legally employ ordinary collection methods against his part interest only. This could, after a foreclosure, leave you with a stranger as a co-owner!

So, even though the third-party lender would have its remedy of foreclosure, you might have recourse against your brother for breaching his fiduciary duty to you with respect to the co-owned property if he got such a loan without telling you or getting your OK.

And to answer your question, mainstream lenders won't do deals like this - too many problems - but maybe down some dark alley there is a loan shark ready to do this loan.