Can we dispute our obligation for this loan?

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Can we dispute our obligation for this loan?

My husband’s ex wife signed a loan for a Foreclosure Prevention 7 yrs ago. This
loan is only in her name. She has since moved to another state and remarried. My
Husband and I have been married for 4 yrs. We would like to sell the house but
the contract that she signed states that we must keep the house for 10 yrs or pay
a high penalty. The contract also states that she must remain in the house, which
she has not. Is there anything that we can do, or are we even obligated to uphold
this contract?

Asked on January 9, 2018 under Real Estate Law, North Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

If you are not on the loan, it does not bind you personally: a loan is a contarct, and only those who voluntarily agree to a contract (i.e. only the parties to the contract, who signed or executed it, or otherwise demonstrated that they were agreeing to it) are bound by it. The ex-wife signing a loan/contract does not personally obligate anyone else on it.
If the house was in her name when she signed the loan, however, the *house*, though not you personally, may be encumbered under it: a property owner can put a mortgage or grant a security interest in her property. So if the home is collateral for or secures the loan, you *may* not be able to sell it without paying the loan, even though if you walked away from the loan, you would not personally owe anything. 
However, if your husband was also on the title when the loan was signed, then depending on how he was on the title, you may be able to eliminate any mortgage or lien on the home (if there is one) because real estate should not be encumbered or mortgaged without the consent of all owners--one owner cannot encumber another owner's interest or share of the property. So depending on how the home was owned, there may be a defense to any mortgage, if there is one. 
A good idea would be to bring the loan document(s) and a copy of the deed/title to a real estate attorney, to review with you, to see if the home is encumbered. Again, though, if only the ex is on the loan, then only she is personally liable for it.


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