Second Lien not being paid by property owner. What happens if I foreclose? What about the First Lender?

UPDATED: Jun 11, 2009

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Second Lien not being paid by property owner. What happens if I foreclose? What about the First Lender?

I sold a property in 2005 in state of TX and carried a second loan. The person has paid however he felt all along but at least was even by the end of each year. However I have not recieved a payment since November of 2008…7 months! What happens if I foreclose to the first lien? What about other liens against the property he’s acquired? Would it be better to go to small claims court? Would I still keep my Lien or would it be lost? I’m not sure what to do and don’t have alot of money to do much! Please help!

Asked on June 11, 2009 under Real Estate Law, Texas


J.M.A., Member in Good Standing of the Connecticut Bar / FreeAdvice Contributing Attorney

Answered 13 years ago | Contributor

Liens get paid in the order of priority.  The first mortgagee holder will get paid if before you if you foreclose onthe 2nd lien.  the liens after you need to be made parties to you action becasue you need to let them know that their right to payment may be extinguished when you foreclose and get paid as there may not be enough money in the property.  I suggest hiring a lawyer to help you with the foreclosure action.  small claims court is not appropriate as you are a secured party already.

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