Lending money and putting a lien on a house - Posted by Alex

Real Estate Investing Real Estate Law
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Posted by Alex on April 26, 2004 at 14:42:57:

Thank you for the information. It has been helpful. I believe I will see a real estate attorney before making my decision.

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Lending money and putting a lien on a house - Posted by Alex

Posted by Alex on April 23, 2004 at 16:44:26:

Hi,

I’m not sure whether I should ask this question here or on the r/e law discussion board. I have been approached by a “friend of a friend” for a loan and have a few questions.

I am going to record a lien on the guy’s house. My questions are as follows:

  • What do I need to do before I follow through with this? I assume I will need to do a title search.

  • If this person cannot pay me back, what options does the lien give me? Would I be able to force him to sell his house or even foreclose on it? He has a first mortgage on the house, so I would think I couldn’t take the house from him. Is the lien merely a means of preventing the man from selling his home without first settling with me?

Any help would be greatly appreciated. Thanks.

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Securing debt with DT - Posted by John Merchant

Posted by John Merchant on April 25, 2004 at 13:41:41:

You’re wise to be demanding a mortgage or Deed of Trust to secure your loan, and the best way to do that is to have your lawyer do it for you…that way it’s done right.

Then, if he defaults in his agreement, you could foreclose on the mortgage or DT.

If you have a choice, in your state, use a DT, as it does NOT require a court judgment to foreclose, as would a mortgage.

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Re: Securing debt with DT - Posted by JohnBoy

Posted by JohnBoy on April 25, 2004 at 14:18:34:

In IL. you can use either a TD or Mortgage. But if you use a TD you still must go through a judicial foreclosure the same as you would with a mortgage.

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Re: Securing debt with DT - Posted by eric

Posted by eric on April 26, 2004 at 11:02:14:

I concur on the DT. However, prior to doing anything, I’d pull a prelim and try and determine how much equity is in the house and how many other notes are secured against the property. You could end up being the third, fourth, or further down the line, junior lien holder. If the borrower defaults and the note is called, the sr. lien holders will get their $$ first and you may end up with nothing.