In the previous couple of blog posts our Los Angeles based real estate attorneys have been analyzing what happened when a co-owner of real property takes out a loan secured by their interest in real property. We have seen how that loan only effects the debtor’s interest in the property and that it survives the co-owners death. The next relevant question is what happens if the co-owner borrower defaults on their debt and the bank or other lender decides to foreclose on the loan? When this occurs and a foreclosure actually takes place, the creditor, however, can only foreclosure on the debtor’s interest in the property. That means that the bank would become a tenant in common (co-owner) along with the other co-owners in the property. (Dined v. Schmidt, 104 Cal.App 4th 1097-1098).
Typically what would happen next is the new owner (the lender) would initiate a partition action to force the sale of the entire property. The non-borrower cotenant would then have a very hard time defeating a partition action because there are very few defenses to a partition action initiated by a co-owner of real property.
For a free consultation on your partition action, for help dealing with a cotenant’s lien or for help with any other real property manner, contact us today at 310-954-1877, email@example.com or by visiting our other website www.schorr-law.com.