If I have a lien on a residential home and the home goes into foreclosure, Did I lose my money? or will the bank owe me?

Asked over 5 years ago - Columbus, OH

I sold a home and the buyers did not have enough to purchase it, so I gave them $10,000. from the proceeds to purchase it. At closing the agent said they would put a lien on the home for the amount owed me. The home owners gave the home up about 6 months ago. Can the bank resell the home? Does the bank have to pay me this money before they can resell it? or am I out the money. Also how can I check to make sure the agent did put a lien on the home. I cannot locate my paperwork. Thanks for any help.

Attorney answers (2)

  1. Brian Russell Hester

    Contributor Level 10

    Answered . You need to find all the paperwork you can from the closing and consult with an attorney. I'm unclear as to what exactly happened. Are you saying you lent the buyers' $10,000 towards the purchase price? If so, there probably should have been a second mortgage filed in favor of you subordinate (behind in line) to the mortgage from the lending company that lent the rest of the purchase price. If such a lien was created, then it should have been filed with the County Recorder's Office. A simple title search on the property should turn up documentation regarding your mortgage interest in the property.

    If not, then your debt to the purchasers is not perfected with a security interest in the real property.
    When you say the owners "gave the home up" do you mean they signed title of the home over to the bank? They didn't contest a foreclosure?

    If there was a foreclosure AND you had a lien against the property, you should have been served a copy of the foreclosure complaint given your security interest in the property.

    I cannot give you a straight answer because I don't feel like I've got all the necessary facts. It'd help to know if the house was foreclosed on or if the buyers just signed the titled over to them. Regardless, it sounds like you do not actually have a perfected lien on the property.

    Check the title records to see if any mortgage to your benefit was ever recorded. Who's agent was it (was it a dual agent, buyers' agent, seller's agent?) How long ago was the sell? These are the questions a lawyer is going to need to know to give you an honest assessment of your rights and options at this point during a consultation. I don't think this forum is sufficient to really give you the guidance you need. You need to consult with a real estate attorney in your area ASAP to protect your rights (if you still have any legal rights to the property) before the house is sold by the bank.

  2. Lucas Eric Rowe

    Contributor Level 11

    Answered . I think Brian is right. There aren't quite enough facts here. If you have a lien, then any proceeds at the sheriff's sale beyond what is owed to the mortgage company would go to you - up to $10,000. If the property sold, but there wasn't enough to pay both the first mortgage and you, then you're out of luck. Also, if your lien was not perfected (properly recorded), then the bank owes you nothing. Nevertheless, if you have a promissory note, you would have a claim for damages against the people you sold to.

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