An owner sells and the buyer takes over the existing loan. To relieve the seller of primary liability, the buyer must:

Question

Quizplus · Accepted Answer

In order to relieve the seller of primary liability, the buyer must assume the existing loan. By assuming the loan, the buyer agrees to take over both the payments and the obligations of the original borrower. This requires obtaining the lender's approval, and the buyer becomes fully responsible for the loan, while the seller is released from primary responsibility. A non-recourse agreement is not usually applicable in this situation because the buyer is assuming the existing loan, and the lender is not required to provide financing for the buyer. Taking title contingent upon the note and trust deed means the buyer's ownership interest is dependent upon the payment of the loan, which is not practical. Taking the title subject to the note and trust deed means the buyer acquires the property with the existing loan in place, but the seller remains primarily responsible unless the loan is later assumed by the buyer.

An Owner Sells and the Buyer Takes Over the Existing