Does transferring your property relieve you of the financial obligations of a promissory note and mortgage? The answer is no. When you sign a note and mortgage, you sign the note that says, “I promise to pay you, the bank, or a lender, the money, plus interest,” and it outlines the payments. Then you also sign another document, a mortgage, which is a lien against the property so that if the payments are not made on the promissory note, then the lender is in a position to foreclose and take the property away from the owner. So by transferring the property to a third party or to an entity, the bank still has a lien against the property since the lien was recorded before the conveyance and you still have the responsibility under the promissory note.
This is particularly frustrating when you have what they call a “white knight” who says, “Oh, I’ll help you with your foreclosure action. Just deed me the property and I’ll see about trying to make the payments or get the payments paid.” Well, what that does is you lose control of the property but you still have the liability under the promissory note and it still affects your credit.
So transferring property or some people would say deeding your property to a third party, does not relieve you of any debt on the property and you can still be sued and be held responsible for the promissory note if the lender so elects.
So if you have any more questions about transferring the property, trying to avoid liability under your note and mortgage, give me a call at (727) 847-2288. Thank you.