What is the result of a grantee assuming the mortgage?

😀 Real Property • Security Interests in Real Estate PROP#213

Legal Definition

Where a grantee assumes the mortgage, they become primarily liable, while the original mortgagor remains secondarily liable as a .

Plain English Explanation

If you have a mortgage on a property and you transfer it to someone who agrees to assume liability for the mortgage, they will take over payment of the mortgage but you remain on the hook in case they fail to perform.

Hypothetical

Hypo 1: Amy get a mortgage on Whiteacre for $50,000 from Bank. Amy later decides to sell Whiteacre to Bob. As part of the sale, Bob contractually agrees to assume liability for Amy's mortgage to Bank. Result: Bob has become primarily liable for the mortgage on Whiteacre, which means Bank will pursue him first for payment. However, if Bob refuses (or is unable) to pay, Bank can pursue Amy because she is secondarily liable and still on the hook.

Related Concepts

How do states treat a mortgage without a note? How do states treat a note without a mortgage? How is a mortgage's priority determined? How may a party be a holder in due course of a note? In lieu of foreclosure, what do many installment contracts prefer and how do courts address this alternative? Under which theories may a mortgagee take possession of a property and begin receiving rents before foreclosure? What are the 5 types of security interests in real estate? What are the benefits of the holder in due course status? What are the limitations of a junior interest? What are the methods of transferring a note? What interests does a foreclosure destroy? What is a deficiency judgment? What is a due on sales clause? What is a foreclosure? What is an installment land contracts? What is a receivership? What is a redemption in equity? What is a statutory redemption? What is the distribution order of proceeds from a foreclosure? What liabilities are associated with a mortgaged property that is transferred to another party? What occurs in intermediate theory states? What occurs in lien theory states? What occurs in title theory states? What results from a party purchasing a foreclosed property subject to a senior interest? What security interests exist under a absolute deed? What security interests exist under a deed of trust? What security interests exist under a installment land contract? What security interests exist under a mortgage? What security interests exist under a sale-leaseback? Who may transfer their interest in a mortgage?

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