Ask Nick – Mortgagor Not Served

Question:

We have a property that our client purchased at Sheriff’s sale. The original mortgagor was not named in the foreclosure action because he conveyed 100% of his interest in the property prior to the foreclosure to a third party (and that third party was named).

In doing some research it appears that the mortgagor is not a necessary party if he has conveyed 100% of his interest in the property and the lender does not intend to pursue a deficiency action. In this case, the statute of limitations on the note has run, as the default was in 2007. Hence, as a matter of law there can be no deficiency.

Would you be able to insure this purchase?

Answer:

We would definitely be able to insure this purchase transaction. Since the mortgagor is no longer in title, the only interest he had was his obligation to the note, not the property. He did not need to be named. Further, since he was not served, the lender cannot pursue a deficiency. Therefore we would be able to insure without an issue in this transaction.

Do YOU have a title query? Please submit your question to info@fortunereo.com. Check back regularly and sign up for our e-newsletter for Nick’s answers to client questions and his thoughts on topics related to all aspects of the title industry.

Under no circumstances is Fortune Title Agency, Inc. or any of its employees giving any legal advice.  The Ask Nick Q’s and A’s are based on situations that the company has experienced and is sharing with the public for informational purposes only.  Always contact your attorney for any legal advice.

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