question on first mortgage holder
Question: If i sell a commercial property to an individual buyer with 100% VTB first mortgage, what is the consequence if the buyer fails to pay tax or insurance during his ownership while I am the first mortgage holder?
Do mortgage holder liable for any tax due? Is first mortgage ahead of anything including past due tax? Have anyone witnessed or experienced foreclosure by first mortgage holder when the owner fails to have adequate insurance coverage or fails to pay any tax? In what situation, I will lose money?
The property is in Ontario Canada, however it is probably standard in anywhere of Canada or US. I appreciate any reply address any one of the questions.
Answer: An unpaid property tax lien, generally will be superior to any mortgages. It will be your responsibility to make up the taxes to prevent the taxing authority from selling the property for back taxes. If it is sold for back taxes, your mortgage will get wiped out. If you foreclose on the property, you should be able to get the taxes that you have paid and any other expenses you have incurred to preserve the property, included in the final judgment. 1. You really should not consider holding a mortgage on the property if you don’t know this. Property taxes are almost always a first position lien.
2. Never, never, never, never, never hold a 100% mortgage on anything, ever. It gives the buyer absolutely no risk, downside, and you all the headaches.
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