Legal Question in Real Estate Law in California

Re: Remedies for Default on Home Equity Line Agreement

On a home equity line of credit (HELOC), your lender takes a security interest in your home. That's clear, and in the event of a default, they can foreclose the home and recover the collateral (the home) to help them repay the debt you owe them. Taken out of context, its hard to say with 100% assurance what that sentence means, however, I would venture to say that somewhere in your loan documentation, there is a further grant of a security interest in other purchases made with the HELOC proceeds. For example, if you purchased a boat or car with your HELOC, the UCC (Uniform Commercial Code) allows a lender to take a security interest in certain non-real estate items (personal property) without having to go through the process of obtaining a statutory lien (a title lien like a car loan). Also, certain types of property have no proper means of being voluntarily liened, aside from a UCC lien, such as tools, and other un-registered types of personal property. In theory, having to guess without having read all of your loan documents, I would say you have given the HELOC lender a grant of a UCC statutory lien in all personal property acquired with the HELOC loan proceeds. If you really want to know for sure, you need to have an attorney review your entire loan package.

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