James and Debra Reid purchased a home for $623,000 in January 2014. They put down $62,300 and financed the remainder with Fifth Third Bank. Fifth Third Bank recorded its mortgage on February 1, 2014. On March 31, 2014, the Reids purchased a swimming pool and the pool contractors, Cristoria Pools, financed the construction for $45.000. Cristoria recorded a second mortgage on the property on April 15, 2014.
On December 15, 2014, the Reids sold their house to the Griffins for $720,000. The Griffins put $120,000 down and agreed to pay the Reids for the existing mortgage in wrap-around. The mortgage balance at the time of the sale was $619,000. The balance on the Cristoria mortgage was $42,000. On August 15, 2015, the Griffins defaulted on their payments. The Reids had already purchased another home and were unable to make the payments on the home. Fifth Third Bank foreclosed on the mortgage.
-Who has third priority after expenses are paid?

Question

Quizplus · Accepted Answer

The Reids have third priority after expenses are paid because the first priority goes to the primary mortgage holder (Fifth Third Bank), followed by the second mortgage holder (Cristoria Pools). The Reids, as the sellers holding the wrap-around mortgage, would be next in line.

James and Debra Reid Purchased a Home for $623,000 in January