A homeowner owns real property encumbered by a valid mortgage. The homeowner sells the property to a buyer without notifying the lender. The agreement specifies that the buyer will take ownership of the property but will not assume the obligations under the mortgage. After the sale, the buyer ceases making payments on the mortgage, and the lender initiates foreclosure proceedings. Who will the lender hold personally liable for the mortgage debt?
The original homeowner remains personally liable for the mortgage debt because the buyer did not accept responsibility for the loan.
The lender may not enforce the mortgage debt because the transfer of property ownership without consent violates the terms of the original mortgage agreement.
Neither party is personally liable for the mortgage debt because the lender was not informed of the property transfer.
The buyer is personally liable for the mortgage debt because they acquired ownership of the property that secures the mortgage.
The original homeowner remains personally liable for the mortgage debt because the buyer did not assume the mortgage obligations. A transaction where the buyer takes the property without explicitly assuming the mortgage does not absolve the original borrower of their responsibility to the lender. The buyer's default may lead to foreclosure on the property, but personal liability for the debt itself lies with the original mortgagor unless an agreement, such as a novation, has been made with the lender. Other answers suggesting the buyer's liability or the lender's inability to enforce the mortgage misunderstand the legal principles regarding transfers 'subject to' a mortgage.
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