Expert: Dick Dennis - 1/18/2011

Question
Can you mortgage a house to someone if you already have a note on it that you are paying. I am in Texas and bought a house from someone who drawed up the paper work. The payment includes the taxes and insurance in it. I know for a fact that he is paying a mortage on the house. Is it legal and due I have a good chance of losing the house.

Answer
It's quite legal and proper, Richard, as long as it drawn up legal and proper. What he probably drew up was what they call a "Wraparound" trust deed, or "All-inclusive" trust deed. Or, if your purchase note was not recorded because you did not pay enough for a down payment, he may have drawn up a "contract of sale" or a "contract for deed." That means the actual title for the property is still in his name. But you will have what is called "equitable title."

Equitable title means you have some interest in the property, no matter what it is. And if sometime in the future he forecloses on you or tries to take the property from you in any way, you can take him to court to recover whatever interest and equity you have in the property.

If you have any doubts about what he has drawn up and you signed, you should contact and talk with a good local real estate attorney. He/she would be able to read it and tell you exactly what you have there. I do wish you well.

Dick Dennis
dixiedee13@aol.com