Assuming a mortgage, estoppel

Question 1

What is an assignment of mortgage?

Answer 1

When ownership of a mortgage is transferred (sold) from one company (assignor) or individual to another (assignee)

This process allows the assignee to take on the rights and responsibilities associated with the mortgage.

Question 2

What is the purpose of an estoppel certificate?

Answer 2

To stop a claim that the amount owed is different from the actual unpaid balance or the interest rate is different from the contracted rate.
It confirms the outstanding balance of the mortgage.

Estoppel certificates are often used in real estate transactions to provide clarity and prevent disputes over mortgage details.

Question 3

When is an estoppel certificate used?

Answer 3

When the property sale involves a condo association or a HOA, a mortgage lien on the property, or a tenant-occupied property

This ensures that all parties are aware of the current financial obligations related to the property.

Question 4

What are the two methods to purchase property that is encumbered by an existing mortgage loan?

Answer 4

• Assumption of an existing mortgage
• Subject to the mortgage

These methods allow buyers to take on the existing mortgage terms while acquiring the property.

Question 5

What does ‘subject to the mortgage’ mean?

Answer 5

The buyer purchases the property, but the existing mortgage remains in the seller’s name (seller is legally liable). The buyer agrees to make payments on the seller’s existing mortgage.

This arrangement can be beneficial for buyers looking to avoid qualifying for a new loan.

Question 6

What is ‘Assumption of an existing mortgage’?

Answer 6

The buyer purchases the property and formally takes over the seller’s existing mortgage (buyer becomes legally liable for loan)

This means the buyer assumes responsibility for the mortgage payments and obligations.