If I sell a building and take back owner carry the first mortgage, do I have any liability risk/exposure whatsoever?
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If I sell a building and take back owner carry the first mortgage, do I have any liability risk/exposure whatsoever?
Asked on February 13, 2019 under Real Estate Law, California
Answers:
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
Liability is not created absent an ownership interest. Accordingly, since taking back a mortgage only gives you a security interest and not an ownership interst (unless you are later forced to foreclose on the building), no legal respnsibilty flows to you.
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 5 years ago | Contributor
If you no longer own the building but simply have a security interest the same as a bank would--the right to foreclose if the mortgage is not paid--then you would not face any liability related to the building (at least until and unless you actually take the building back). If you don't own or control a building but only have the right to receive payments of the purchase price (and foreclose if not paid), that does not create liability.
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