Q: I bought my home in Dec 2014 in California and I just found that my previous owner has an HELOC against this property.
She died a few months ago. One day I saw a notice pasted on my property one day from a company hirded by prior owner's lender and I called them to inform that this home was sold by her. I have Title insurance on this property. My question is will I be liable for non-payment of this HELOC loan? As far as I know that lady was single and had no kids (only sisters).
A: My recommendation is to hire a CA attorney that handles real property litigation. He should search the title, read your policy, and make a very precise Claim against the insurance co. The Note is not your obligation as you did not sign it, but apparently there is a secured debt against the property. If you financed it, your lender is going to be upset and will probably have a Claim against their own policy as you and your lender may both get foreclosed on. And you signed that 2nd priority Note. Hopefully this unknown secured loan is not properly perfected against the property. In any event this is why you bought title insurance, which unfortunately does not cover very many risks.
A:
No, you are not liable for the previous owner's HELOC loan. The HELOC loan is a debt that was incurred by the previous owner, and it is not your responsibility to repay it. The lender will need to go after the previous owner's estate for the money.
If the previous owner's estate does not have enough money to repay the HELOC loan, then the lender may be able to foreclose on the property. However, if you have title insurance, then you will be protected from any losses that you may incur as a result of the foreclosure.
Title insurance is a type of insurance that protects you from losses that you may incur as a result of defects in the title to a property. In this case, the defect in the title is the HELOC loan that was taken out by the previous owner. If the lender forecloses on the property, then you will be able to file a claim with your title insurance company and they will reimburse you for any losses that you incur.
You should contact your title insurance company and let them know about the situation. They will be able to advise you on your rights and options.
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