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Bankruptcy Law/unperfected lien on discharged 2nd mortgage

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Expert: - 7/29/2010


Question
Chapter 7 BK discharged in Minnesota on 6/2008 claimed 2nd mortgage (Heloc) as secured debt, Found out its never been recorded. Heloc was originated on 6/2005, it was discharged as well. Property is Torrens; certificate of title as of 6/25/2010 shows 1st mortgage lien been on record only. Can Heloc record lien now? Can they do a judicial foreclosure 5, 10 years from now? Is mortgage lien still valid?

Answer
I don't know what "Torrens" is, but if the lien was unperfected on the date your chapter 7 case was filed, then they cannot record it later after the debt has been discharged.  Whether they can foreclose or not may  depend in part on the laws of the state where the property is, but I'm pretty sure that if was unrecorded before the bankruptcy, they are out of luck.  You should double check with a bankruptcy attorney and/or real estate attorney in the state where the property is located to be sure.

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Mark J. Markus is a Los Angeles bankruptcy attorney who has practiced exclusively bankruptcy law in California since 1991 and is rated A+ by the Better Business Bureau and is AV-rated by Martindale-Hubbell. He represents debtors, creditors, and Trustees in Chapter 7, Chapter 11, and Chapter 13 of the bankruptcy code throughout California.

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