Legal Question in Real Estate Law in California

You are subject to the existing deed of trust, but are not responsible for the actual loan itself, unless you assumed the loan. To do that would have required the lender's permission.

The fact that you are subject to the existing deed of trust means that the lender can foreclose, and the title at the foreclosure sale will relate back to title at the time the deed of trust was executed, so any interest that you have in the property will be terminated. That's what it means to be subject to a prior recorded deed of trust when you take title.

The only persons who can default on a residential mortgage are those whose signatures appear on the loan documents. That's the general rule.

There may also be a distinction between those who sign with an obligation to pay, and those who sign as owners to put the property up as collateral. For example, there could be a co-signer or guarantor or surety who signs and assumes some payment obligation, but who is not an owner; or, someone who is a co-owner who signs to put his interest up as collateral but assumes no payment obligation. You might fall into the latter category, but this would be unusual. Indeed, lenders and loan servicers are generally reluctant to even accept payments from persons other than the borrower.

Most lenders want all the owners to be co-borrowers, with both an obligation to make payments and putting up their ownership interest as collateral via a deed of trust. If you are on title but not a borrower/debtor on the loan, perhaps you acquired your interest after the loan was made. Or, possibly, the lender just overlooked you. A perhaps more important question is whether the deed of trust includes (as collateral) all interest in the home - both the paying owner's and yours.

If, as is likely, the entire home is mortgaged, and the loan isn't paid, the entire home will be foreclosed and sold, sooner or later. Anyone living in the home will be evicted (probably, at least). So, loss of your home is your concern and a non-borrower co-owner.

I should also mention three other things: First, nearly all loans contain acceleration clauses that make the entire loan due and payable at the lender's option if the owner sells or gives away an interest in the collateral. Next, because of the collateral-first and antideficiency laws in California, lenders rarely go after borrowers; their remedy is usually to conduct a trustee's sale and accept the results thereof, without sueing the borrower(s); and finally, on rare occasion a lender will sue an occupant of the property, whether owner, tenant or guest, for property damage willfully or carelessly done or caused by that occupant.

I hope this answers your question. Your greater overall risk is foreclosure and eviction, not financial liability.

He who is on the loan owes the money. But if the mortgage isn't paid, the house will be foreclosed, regardless of who is on title.