Legal Question in Real Estate Law in Indiana

Re: leins on mortgages

Neither a borrower nor a lender be. You should consider this loan to be a gift, so if you are ever repaid, you can enjoy a gratifying surprise. If you were really to consider the loan to be an investment, as you say, then you would have an independent appraisal of the property (paid for by the borrower), and make sure the amount of your loan and the amount of the mortgage and other encumbrances added together do not come to more than 80% of the appraised value. You would also have a preliminary title insurance policy prepared for you to examine. And you certainly would make your loan in the form of a mortgage note, so you could have an enforceable lien on the property. But your lien will be junior (subordinate) to all existing liens not paid you, such as the existing mortgages, tax liens, and judgments. The title policy would reveal the extent of existing mortgages, liens and judgments (usually in the "exceptions" section.) You would also have a credit report on the borrower, to help evaluate the risk of nonpayment. So, again I say, you would have a happier life to consider the loan a "gift," that you don't worry about ever being repaid. Good luck.