Legal Question in Real Estate Law in Maryland

Unpaid Lien

I had a second mortgage on a house I just sold. The settlement company omitted it from the HUD-1, so it was never paid. I notified my loan officer, and she notified the settlement company. Furthermore, the title search should have showed a second lien. I was given a check at settlement, so the settlement company says that should repay the loan. However,

I no longer own this property. Who's responsible for repayment of this loan?


Asked on 11/19/03, 1:41 pm

1 Answer from Attorneys
Robert Sher Wagshal and Sher

Re: Unpaid Lien

You are legally responsible to repay the loan. You signed a promissory note with the lender which is not extinguished by the sale of the property. In addition, your real estate contract with the party that bought your home requires you to convey the property without any liens on it. Until the second mortgage lender is paid off, they will have a lien on the property, and therefore you haven't complied with your contractual obligations.

The fact that the settlement firm failed in their duty to report this loan and thereby to pay it off at settlement may give the buyer a claim against them if the loan remains unpaid, but it in no way relieves you of your responsbility.

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Answered on 11/19/03, 2:59 pm


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