A seller in Stockton, California, offers to carry back a second deed of trust for $50,000 to help the buyer with the purchase. The buyer obtains a conventional first deed of trust from a bank. If the buyer defaults, what is the seller's position regarding the carried-back financing?
Correct Answer
C) The seller holds a junior lien that would be wiped out if the first deed of trust holder forecloses through a trustee's sale
A seller carryback second deed of trust is a junior lien. If the first deed of trust holder forecloses through a trustee's sale, junior liens are wiped out. The seller would lose their security interest in the property, though they may have a right to surplus proceeds.
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Related Topics & Key Terms
Key Terms:
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