I have owned a house for seven years. Its is double under water with a 3 payment option, now I'm up to the third and final. A year ago I purchased another house with my savings to live in and rent out the first larger house. I am now to a point the rent I receive and my paycheck I can no longer afford the payments. Can I let the first house go into foreclosure and keep the second house I recently bought?
Yes, assuming the house that you plan to let go to foreclosure has only one loan on it (no HELOC or second deed of trust or any other liens), and that the lender proceeds by way of non-judicial foreclosure instead of judicial foreclosure. I also assume the house you plan to let go to foreclosure is located in California.
Frank W. Chen is licensed to practice law in the State of California. The information presented here is general in nature and is not intended, nor should be construed, as legal advice. This posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, consult your own attorney.
First, I would like to introduce you to our firm. I have 31 years of active legal experience in serious real estate litigation and transactions. Originally, I was a lawyer for a title insurance company. After that I have performed services for many major developers including Shappell, Ponderosa, Morrison, GenStar and Bas Homes. I have also performed services for a public entity - Alameda County Water District having provided eminent domain services for Plaintiffs and Defendants. In addition, we have represented numerous individuals each year in real estate litigation. I have personally been involved in the acquisition and construction of real estate property since the age of 20. Our firm has represented or sued most major real estate brokers in Northern California.
The answer to your specific question is you can let the first house go into foreclosure and keep the second house you recently bought, yes. Depending on the nature of the financing you have on the first house, if you have a second or third Promissory Note and Deed of Trust on the first house, then you could be sued, and if a Judgment was obtained, they could put a lien on your second house. If you do not have a recourse loan associated with the first property, then it looks like you have no problems whatsoever.
I hope this is helpful.
John N. Kitta, Esq.
Mr. Chen's answer was sound. See it.
Any comments offered are not intended as legal advice. This attorney does not know the specifics of the particular case sufficiently to offer legal advice. You should hire a lawyer who can evaluate the details of your specific situation before offering advice.
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