What repercussions are there for falling behind on a promissory note when the property is already inyour name?

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What repercussions are there for falling behind on a promissory note when the property is already inyour name?

I decided to buy a house that my grandmother owned. I moved in a year ago and signed a promissory note 3 months later. It stated that I would pay her $500 a month until I paid $50,000. Since I moved, I’ve had trouble finding a job and I’ve fallen behind in my payments. What legal actions could my grandmother take if she decided she wanted all the money right now? There is no clause in the promissory note that says what will happen if I’m behind or default on my payments. Also, I have already signed a deed so the house is in my name. Can she evict me or only sue me for breach of contract?

Asked on July 22, 2011 West Virginia

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

What really happened here is no different than what happens with a conventional mortgage, only your Grandmother is holding the note on the property and her name is probably not listed as the lien holder on the property as a bank would be.  But her rights really depend on how the promissory note is written and interpreted under state law.  If the note is written as payment for the property I fear she may be able to foreclose on you.  If it is written as just an agreement to pay back the debt then she can sue you for the payments.  IS there an acceleration clause, meaning that she can sue for the entire amount rather than only each month's payment as it becomes due and owing? Get help sorting through this.  Good luck. 


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