if I have paid off the house and now I want to buy onother house and for some reason I will not be able to pay for it. Will my paid off house be in danger? thank you
Real Estate Attorney
If you buy the other house to live in and finance the other house with what is known as a purchase money security interest, your paid off house will be safe. This is because CA has an anti-deficiency statute that protects homeowners from having to pay for the difference between what the house is sold for at foreclosure and the amount of the mortgage.
Disclaimer: The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change.
As noted, CA's anti-deficiency statute will protect you personally from a lender for any deficiency over and above your "purchase money" mortgage for this 2nd house. You'd also be wise to keep title to the 2nd rental property in an LLC, which will also protect you and your paid off house from any liability issues from this rental property.
Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship.