Posted by Ronald * Starr(in No CA) on July 13, 2003 at 11:31:35:
Larry-------------
Nice to talk to you.
NOTE: I am not an attorney. You might want to consult with an attorney about this matter.
To answer that question, look at your note and security instrument (deed of trust or mortgage). Usually there is no promise by you that you will agree to subordinate to a new first loan. In that case, when the old first loan is paid off, your loan automatically moves up to first position. Then any new loan will go into second position. The lender doing the refinancing is very unlikely to allow their loan to go into second position. They will want it to be in first position. For that to happen, your loan will have to be removed from the property.
How?
Maybe by you getting paid off at the time of the refinance? Maybe by your agreeing to move it back to second position behind the new first loan? Maybe by your agreeing to make it an unsecured loan? Maybe by your agreeing to have it secured by some other property with good equity, either the property owners’ or somebody else’s that agrees to it, such as a parent or sibling of one of the owners?
Sure, you have options.
However, if your agreement when you carried back the second said you would agree to subordinate to a new first loan, all of the above probably goes out the window. Although apparently a lot of subordination agreements are not well written and can be negated by a good attorney. I have no experience with that so can’t give more details.
Good InvestingRon Starr*****