Tenant-in-Common foreclosure question...

[tommyleo]

If someone owns only part of a property (specifically, as a Tenant in Common) and he takes out an equity loan against the property in his name only (that is, the other owners did not sign off on the loan), what happens if that loan goes into foreclosure? Can the bank force a sale of the entire property? Or can the bank only force a sale of the portion of the property that the borrower actually owns?

[US Loan Modifier]

tommyleo

 

The lien is on the home, the entire home, the entire home is at risk.

 

It doesn't matter how many people signed or didn't sign on the note, the important part is that someone signed a note and put a mortgage secured by the property. All of it.

 

Hope this helps

[tommyleo]

tommyleo

 

The lien is on the home, the entire home, the entire home is at risk.

 

It doesn't matter how many people signed or didn't sign on the note, the important part is that someone signed a note and put a mortgage secured by the property. All of it.

 

Hope this helps

 

 

Thanks for the reply. I've been away on vacation and hadn't checked for replies lately.

 

While I understand your logic, consider the instance where a large property (say, a 30-story rental apartment building) has dozens of investors, each owning a certain amount of shares in the property. Again, a "tenancy in common." If just one of those investors uses his equity to get a loan, and that one investor's loan goes into foreclosure, can the bank foreclose against the entire property? I'd find that very hard to believe because no one would ever want to be a shareholder in a property if just one investor's bad loan can force a sale of everyone's shares. What shields all the other investors from that one bad loan?

[Mayor]

Keep in mind US Loan Mod got put into the 'spammer' category.

[domi]

What shields all the other investors from that one bad loan?

 

The Tenancy-in-Common Addendum has the answer to that.

There is going to be a pot of money to keep paying the lender for several months. The idea behind it is that in the mean time another buyer should be located.

 

Things are going to be slightly different if each equity holder has a fractional TIC loan vs a blanket TIC loan for the entire property.

 

Best to dig up the TIC Addendum and read it to understand what is going to happen specifically for the property in question.

 

A TIC addendum is like HOA docs in the sense that its unique to a certain property.

 

Hope this helps.

 

Dominique

[Tommy The Cat]

What shields all the other investors from that one bad loan?

 

The Tenancy-in-Common Addendum has the answer to that.

There is going to be a pot of money to keep paying the lender for several months. The idea behind it is that in the mean time another buyer should be located.

 

Things are going to be slightly different if each equity holder has a fractional TIC loan vs a blanket TIC loan for the entire property.

 

Best to dig up the TIC Addendum and read it to understand what is going to happen specifically for the property in question.

 

A TIC addendum is like HOA docs in the sense that its unique to a certain property.

 

Hope this helps.

 

Dominique

To make matters more confusing, sometime this Spring '09 the SEC ruled that TICs are securities. That would mean that a non judicial foreclosure is possible and 'internal" foreclosures which can be enforced by the TIC group (managers).

 

Although TICs have been around for quite awhile, especially in the gay communities in San Francisco/Calif, you need to find a specialist attorney to look over the usually very lengthy TIC Agreement. A place to look for those attorneys are in the schools that offer TIC courses to lay and legal alike. Often the better and most informed attorneys teach these classes.

[Tommy The Cat]

While I understand your logic, consider the instance where a large property (say, a 30-story rental apartment building) has dozens of investors, each owning a certain amount of shares in the property. Again, a "tenancy in common." If just one of those investors uses his equity to get a loan, and that one investor's loan goes into foreclosure, can the bank foreclose against the entire property? I'd find that very hard to believe because no one would ever want to be a shareholder in a property if just one investor's bad loan can force a sale of everyone's shares. What shields all the other investors from that one bad loan?

 

It is certainly possible for the bank to do just that but it's rare to see TIC securities or shares foreclosed on. The TIC Agreement and management usually has defaults controlled internally. I don't think I have ever heard of one being foreclosed on furthermore Lenders have preferred to take the entire property as lumped collateral i.e. they look for one payment from the TIC managers to service the mortgage not 30 as in your case.