[WSBARP] Deed of trust and foreclosure

[Rick Hoss]

The security was eliminated, but not the promissory note. It survives. There may still be defenses to payment of a promissory note, and if you want to really look hard start with RCW Ch. 62A.3, Negotiable Instruments. 

 

 

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Kaitlyn Jackson
Sent: Tuesday, November 26, 2019 2:24 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Deed of trust and foreclosure

 

I'd like to know the answer to this as well! 

 

Kaitlyn

 

On Tue, Nov 26, 2019 at 2:21 PM Timothy Lehr <timothy at stileslaw.com <mailto:timothy at stileslaw.com> > wrote:

Real Estate attorneys,

 

PC owned real property with a mortgage and deed of trust securing the debt. PC subsequently took out a line of credit on the real property, signed a Bank Equity Maximizer Agreement (line of credit agreement), and equity lender secured debt with deed of trust on same property (inferior to first mortgage). 

PC then defaults on first mortgage and property is eventually foreclosed and sold at trustee’s sale. Bank buys the property at the trustee’s sale then sells it to third party. Both deeds of trust are wiped out, but PC still has this Equity Agreement and has been paying on it.

 

PCs question is whether he is still required to pay on the line of credit. It has not yet been paid off. The agreement and deed of trust seem to be silent on this point. My assumption is the lender could still enforce the agreement that was signed even though the security instrument has been removed from the property. I also assume this situation comes up pretty regularly, but it’s my first time looking into it. Any thoughts are appreciated. 

 

Tim

 

Timothy C. Lehr

Attorney at Law

Stiles Law Inc., P.S.

 

p:   360.855.0131

e:   timothy at stileslaw.com <mailto:timothy at stileslaw.com> 

w:  www.stileslaw.com <http://www.stileslaw.com> 

 

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Kaitlyn R. Jackson | Attorney| DIMENSION LAW GROUP PLLC 
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