Fast Fact: Release of Liability

Release of Liability

FACT: This is a very important paragraph in your mortgage or deed of trust. Tricky, how the things you don’t pay much attention to can come back and bite you in the proverbial butt. This is one of them.

The reason we are discussing it here is because it comes into play if you decide to let someone assume the mortgage on your home. This is further complicated by the fact that the bank may agree to allow someone to assume the mortgage on your behalf; yet you are still legally obligated to pay the mortgage should THEY become unable to keep up payments.

How could that be? It’s called "release of liability.” Read the section in your note. It clearly says that unless the lender specifically grants a "release of liability" you are still on the hook for all payments until the loan is paid in full. My son said when he was 13, “you better ask somebody." Consider yourself warned: contact an attorney and have him to prepare a "release of liability" to be signed by the lender, PRIOR to agreeing to allow anyone to assume your mortgage. You’ve already agreed to this arrangement when you took out the loan; you need someone to get you “off the hook.”

**This also applies to rental car contracts. You are on the hook for the time and amount you promised no matter what side deal you cook up after you leave the dealership. (In fact, you are prohibited from legally making any side deals). Yes, I know it happens all the time. Consider yourself warned. I am trying to look out for you.

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