March 22, 2010
Dear George: If a property has first and second mortgages and the first mortgage then is paid off, does the second mortgage become the primary lien, or can the owner replace the first mortgage with another loan?
Answer: If you pay off the first mortage, the second mortgage becomes the only and primary lien against that property. You might be able to place a new first lien on the property, but the holder of the original second mortgage must agree.
Dear George: Is the seller or his agent allowed to dictate the title company used in the sale of a property? I know that this point is negotiable in a transaction, but can the seller legally say, "I will agree to pay for the title policy only if you use X
Title Company."
Answer: The seller may dictate such a condition. The agent may not, unless the agent is acting on instructions from his client, the seller. NB: New RESPA rules dictate that the buyer can choose the settlement service provider as a part of the new Good Faith Estimate disclosures, but the seller does not have to pay for it.
E-mail a question to ask George & Chuck or fax it to 713-978-6684. The answers to questions in this column do not contain legal advice. If you wish to obtain legal advice, you should consult your own attorney.
