Can we dispute our obligation for this loan?

UPDATED: Oct 1, 2022

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Can we dispute our obligation for this loan?

My husband’s ex wife signed a loan for a Foreclosure Prevention 7 yrs ago. This
loan is only in her name. She has since moved to another state and remarried. My
Husband and I have been married for 4 yrs. We would like to sell the house but
the contract that she signed states that we must keep the house for 10 yrs or pay
a high penalty. The contract also states that she must remain in the house, which
she has not. Is there anything that we can do, or are we even obligated to uphold
this contract?

Asked on January 9, 2018 under Real Estate Law, North Carolina


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 years ago | Contributor

If you are not on the loan, it does not bind you personally: a loan is a contarct, and only those who voluntarily agree to a contract (i.e. only the parties to the contract, who signed or executed it, or otherwise demonstrated that they were agreeing to it) are bound by it. The ex-wife signing a loan/contract does not personally obligate anyone else on it.
If the house was in her name when she signed the loan, however, the *house*, though not you personally, may be encumbered under it: a property owner can put a mortgage or grant a security interest in her property. So if the home is collateral for or secures the loan, you *may* not be able to sell it without paying the loan, even though if you walked away from the loan, you would not personally owe anything. 
However, if your husband was also on the title when the loan was signed, then depending on how he was on the title, you may be able to eliminate any mortgage or lien on the home (if there is one) because real estate should not be encumbered or mortgaged without the consent of all owners--one owner cannot encumber another owner's interest or share of the property. So depending on how the home was owned, there may be a defense to any mortgage, if there is one. 
A good idea would be to bring the loan document(s) and a copy of the deed/title to a real estate attorney, to review with you, to see if the home is encumbered. Again, though, if only the ex is on the loan, then only she is personally liable for it.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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