If I lost my house to foreclosure and a company had a lien on it, should the company get paid by the bank when my home sold?

UPDATED: Dec 21, 2011

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If I lost my house to foreclosure and a company had a lien on it, should the company get paid by the bank when my home sold?

I had a lien put on my home 4 years ago. I lost the house to foreclosure. Once the house people would not work with me to let me keep the house I surrendered it. I thought beings the other company had a lien on my house they would get there money from the sale of the house beings they have a lien on the house and the bank would have to pay them before they could sell the house. Should the loan people be able to sue me or should they have gotten the money from the bank when they sold the house beings there was a lien on the home?

Asked on December 21, 2011 under Real Estate Law, Michigan


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

A mortgage, especially a purchase money mortgage (i.e. a mortgage you used to buy the home) typically has priority over a lien. That means that when the house is foreclosed upon, then sold, first some of the sale proceeds are used to pay off administrative costs of the sale; then the proceeds are used to pay off the mortgage; and only if the mortgage is paid in full will any remaining money be applied to the lien. The bank does not need to pay the lien in order to sell; instead the lien may be paid off after the bank sells, but only if the house sells for enough. If it does not, the lien holder may still seek the money from you.

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