Posted by Natalie-VA on August 01, 2008 at 06:05:44:
I am not an attorney, but it sounds like your attorney is right. If you sell the property and let the buyers take over your loan, you will no longer own the property, yet you’ll still be responsible for the debt. Now that the bank knows, you might also check to see if that violates your agreement with them.
Maybe your attorney can suggest an alternative such as selling on contract or on a wrap. Here, you wouldn’t give up the deed until they pay it off.
This is my situation, I along with 2 partners own a commercial property in TX of 113 units. We are in the process of selling the property for a nice profit until we reached a snag, We signed a personal guarantee on the mortgage and the new buyer is looking to assume the loan because of the favorable rate but they do not want to assume the personal guarantee and the bank will not let us out of it, My attorney is basically saying that we really have no other way of making this deal work because should the buyers default on the mortgage we will be liable and may not not have any rights to the property ???
This makes no logical sense to me, can anyone please give me some advice if my attorney is accurate in his assesment, I am not not looking for free legal advice just to know if my attorney is not correct. I thank you so much.
Your debt to bank not released - Posted by John Merchant
Posted by John Merchant on August 17, 2008 at 19:43:45:
I’ve found that many very smart people really don’t understand that when they sign a note, that note isn’t released until that note is paid.
So it doesn’t matter who else signs, or assumes, or guarantees that note…it’s going to stay alive just as originally siged until it’s paid.
Sounds to me like your selling on a RE contract would make more sense so you have more control until you and the bank are all paid.
You’d continue to pay your bank, your buyer would pay you, and if your buyer defaulted you’d then proceed to file a Forfeiture of Contract and take the apts back.