A borrows $50,000 from Bank and pledges real property as security. After the loan, A sells the property to B, who buys subject to the mortgage. B then defaults on the mortgage loan. Under the following example, which of the following statements is/are true?

Question

Quizplus · Accepted Answer

A) The bank may foreclose on the property because B bought the property subject to the mortgage, meaning the mortgage remains on the property despite the sale. B) The bank can sue A to recover the debt because A is the original borrower and remains liable for the debt even after selling the property. C) The bank cannot sue B to recover the debt directly because B did not assume the mortgage; B merely took the property subject to the existing mortgage. D) A can sue B for reimbursement if A pays the bank because A and B may have an agreement that B will pay the mortgage, or A may seek reimbursement based on equitable principles.

A Borrows $50,000 from Bank and Pledges Real Property as Security