In a mortgage scenario where A mortgaged land to B to secure a debt and later sold to C, which statements are true?

In a mortgage scenario where A mortgaged land to B to secure a debt and later sold to C, which statements are true?

• A. All
• B. None
• C. Only one
• D. Only two

Answer: (D)

When land is mortgaged to secure a debt, the mortgage creates a lien on that land that runs with the property. It doesn’t disappear just because the owner later sells the land. So, after A mortgaged to B and then sold to C, the lien stays on the land and the new owner purchases title subject to that lien. The borrower (A) remains personally liable for the debt unless the lender releases that liability or the new owner assumes the mortgage and the lender accepts the assumption. The lender can still enforce the mortgage by foreclosing on the land if the debt isn’t paid, regardless of the change in ownership. So, the statements that are true in this scenario are that the mortgage continues to encumber the land and that the buyer takes title subject to the mortgage. The sale does not extinguish the mortgage, and the buyer is not automatically personally liable unless they assume the loan.

When land is mortgaged to secure a debt, the mortgage creates a lien on that land that runs with the property. It doesn’t disappear just because the owner later sells the land. So, after A mortgaged to B and then sold to C, the lien stays on the land and the new owner purchases title subject to that lien. The borrower (A) remains personally liable for the debt unless the lender releases that liability or the new owner assumes the mortgage and the lender accepts the assumption. The lender can still enforce the mortgage by foreclosing on the land if the debt isn’t paid, regardless of the change in ownership.

So, the statements that are true in this scenario are that the mortgage continues to encumber the land and that the buyer takes title subject to the mortgage. The sale does not extinguish the mortgage, and the buyer is not automatically personally liable unless they assume the loan.