Seller Financed Second
I am about to sell a property and hold a second note. I need help in figuring out a couple of things:
1. If the buyer fails to pay on the second, can I foreclose even if the first is current?
2. What happens if the first forcloses?
3. How do I record the second-can this be done by the title company? (I am assuming it needs to be recorded to have a lien or do I file something different for the lien???
I am new at this (as you can tell) and could use any productive advise before signing the contract.
1. Yes, you can foreclose on the 2nd even if the 1st is current.
2. If the 1st forecloses and you do nothing, your 2nd is wiped out. The first has to notify you as a defendant if they are foreclosing you out, and if they do, contact a good foreclosure atty to go thru your options.
3. The title company will usually record your 2nd just after they record the first. No lien filing is required. The 2nd mortgage filing will suffice.
[addsig]
Thanks!!
Do the terms of the 2nd need to be spelled out in the contract or can that be done seperately in the closing docs (I guess we would supply to the title company?)
If the first forecloses, they have to let you catch up the payments and take over the payments, if you want to. It would make logical sense that the first would be barred from calling the note due to a second-holder, and there is now some good case law to support that rationale.
[addsig]
LeaseOptionKing.... Are you sure of what you wrote? I have never heard of the 2nd being given the option of catching up payments if the 1st mortgage forecloses.
You know, before the 1st has control of the property, they have to be the high bidder at the courthouse steps. At that point the 2nd is foreclosed out and has no rights.
Did you mean to state that in the case of the 2nd foreclosing, the courthouse buyer of the 2nd --whether the 2nd holder himself or a 3rd party-- can catch up delinquent payments and assume the 1st? We follow that scenario all the time.
[addsig]