What happens to a life estate if it is foreclosed on by a second mortgage holder?

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What happens to a life estate if it is foreclosed on by a second mortgage holder?

Asked on November 17, 2011 under Real Estate Law, North Carolina

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Good question. A life estate in a given property is subject to all prior liens of record recorded on the property. Meaning, if the given life estate to someone is set forth in a recorded document upon the given property before any lien of any second mortgage holder, then an argument can be made that the life estate is a senior interest and would remain after the second forecloses on the property.

However, if the life estate is recorded after the second trust deed is recorded, the life estate would be wiped out by a successful foreclosure by the second trust deed.


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