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If you own property with another partner and want to take a line of credit to pay off bills does the other owner have to be involved with the process? |
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The standard procedure of granting a mortgage requires that all owners sign the mortgage. When only one co-owner has signed that is usually due to someone's serious mistake or some special arrangement with the lender who is aware they are only acquiring a half interest in the property. One person cannot encumber the other person's interest.
If only one co-owner granted a mortgage and the borrower defaulted then the lender could only foreclose on the interest of the person who granted the mortgage. The lender would become a tenant in common with the other co-owner who didn't sign the mortgage. Both would then be entitled to the use and possession of the property.
Careful lenders avoid that sort of situation by examining the title to determine if there are outstanding liens AND to determine the legal owner of the property.
First answer by Jalex137. Last edit by Kluss. Contributor trust: 70 [recommend contributor]. Question popularity: 35 [recommend question]
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