Foreclosure of Investment Property

[carollod]

Hello All,

I have a question regarding what my liability in the following case is:

My ex business partner and I purcahsed a 2 family property aprox 2 years ago. The mortgage was in his name only, I am only on the deed and was placed on about a month after the purchase happened. Recenetly the house has gone into foreclosure due to a flood which destroyed the house, we were not able to have any tenants and therefore could not afford the mortgage.

My bus partner has retained an attorney for himself and sent me a letter basically stating that I should do the same as I am respponisble for half of the deficiency.

The question is there really any legal obligation on my part to do so? Can the lender come after me as well just being a deed holder?

Please advise

[Mr. Knowitall]

It's not so much whether the bank can come after you - from what you write they can't. It's a question of whether your partner can come after you, and if you were equal partners in this venture and shared responsibility for the mortgage, no matter whose name the mortgage is in, he probably can.

[foreclosurefish]

Since you're not on the loan, the bank may not even know much of who you are, especially if you were not put on the deed until after the loan closed. Unless you've given the bank your name, DOB, SSN, etc., they shouldn't have any of your personal information to come after you for any obligation on the loan.

But as a partner for the business, you may be responsible for half of the deficiency. In that case, you should consider getting an attorney to find out what your actual liability would be in this situation to your partner. You probably don't have any obligation to pay the bank anything, though.

You can assume that your partner's credit is shot if the mortgage hasn't been paid, especially if there is a foreclosure status reflected on his credit report for the loan. If he's planning on paying the deficiency to stop foreclosure, then as a business partner, you may be responsible for half of the amount paid.

Or if he ends up with a deficiency judgment on his credit after the foreclosure, then the question becomes, do you both pay the judgment and only his credit takes the hit, does he place a court-ordered judgment against you for the amount of the deficiency, etc.?

All these questions should be discussed with your partner and/or attorney, depending on all the circumstances.