Does signing a release indemnity for a deed of trust, relieve someone from the underlying debt?

I loaned my sister money years back and signed an indemnity deed of trust. My sister put her house up as collateral. Now that house is being sold, but so low that the proceeds won’t cover the whole loan amount owed. I am being asked to sign a release for the indemnity deed of trust. I want to make sure she’s still obligated to pay me back the entire loan if I sign this document.

Asked on August 25, 2011 New York

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

If you sign the requested "release of indemnity" for a trust deed and it is recorded on the property that is security for your loan, your sister will be able to sell the property without having to pay you the money that you loaned her from the sale of this property where it was security for your loan to her.

Whether or not your sister is obligated to repay you the loan you made her from other sources of assets she has down the road remains to be seen in that your question does not state the terms of any contract or promissory note you may have with your sister for the loan and/or if her house was the only expected means to repay your loan.

Before you sign the requested "release of indemnity" for your loan, you need to get a whole new written agreement signed and dated by your sister with you setting forth her intent to repay you the loan you made her later on.

Good luck.


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.