Property on sale with 2 liens

Member since 2023 · 7 posts · 1 vote

Starting the process of placing an Ocala property in the market. It's an owner financed arrangement with a 2nd lien to a private lender. The contract requires balance payment to the lien holders by February 2026. The market has gone down during the duration of the 3 years of the contracts. I may be able to sell the property to cover the 1st lien holder (owner financed) but not the 2nd lien holder (private lender). Any advice on my options? Thanks in advance.

0 Reply

90 views

Most Popular Reply

Don KonipolBusiness Member

Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

Quote from @Victor Genel:

Any advice needs to know whether or not the loans have been personally guaranteed and if so you’re ability to cover any shortfall in sales price, and finally if your other assets are exposed to loss in event of a judgement or whether they are “asset protected”. Otherwise advice given may be completely incorrect. Please especially avoid those posters answering with generic AI responses that seem to cover all situations but are actually completely useless.

Private Mortgage Financing Partners, LLC

Website View Page

1 Reply

See this reply in the discussion

5 Replies

Jump to latestLatest

Sort by

Jaycee GreenePro Member
Real Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 727 votes
1y
Quote from @Victor Genel:

Starting the process of placing an Ocala property in the market. It's an owner financed arrangement with a 2nd lien to a private lender. The contract requires balance payment to the lien holders by February 2026. The market has gone down during the duration of the 3 years of the contracts. I may be able to sell the property to cover the 1st lien holder (owner financed) but not the 2nd lien holder (private lender). Any advice on my options? Thanks in advance.

Hey @Victor Genel, welcome to the BP Forum! That’s a tough spot, but not uncommon when values dip mid-term. A few thoughts:
Start with communication - Talk to both lienholders early, especially the 2nd. Many private lenders would rather restructure than risk a default or legal battle that nets them nothing.

Get legal clarity - Before listing, confirm your state’s foreclosure and lien release procedures. A good real estate attorney can tell you how far your liability extends.

Explore a short payoff - If market value covers the 1st but not the 2nd, propose a discounted settlement with the 2nd lienholder to release their lien at closing.

Consider creative exits - Depending on your equity position, options like subject-to sales, wrap financing, or lease-options could bridge the gap until prices recover.

Bring in an investor partner - Someone could inject enough capital to clear the liens, take partial ownership, and share any upside later.

Lead with transparency and negotiation, not avoidance. Private lenders usually prefer some return over a prolonged legal mess.

Good luck!
[email protected]
0 Reply
Victor Genel
OP
Member since 2023 · 7 posts · 1 vote
1y
Thank you for your advice!
0 Reply
Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1y
Quote from @Victor Genel:

Starting the process of placing an Ocala property in the market. It's an owner financed arrangement with a 2nd lien to a private lender. The contract requires balance payment to the lien holders by February 2026. The market has gone down during the duration of the 3 years of the contracts. I may be able to sell the property to cover the 1st lien holder (owner financed) but not the 2nd lien holder (private lender). Any advice on my options? Thanks in advance.

talk to the second and see if you can get more time to pay it off because its underwater, if you want to keep the home. Remember if you do sell it for less than its owed it does not mean the debt goes away, they can still go after you for that balance
7e investments53 Reviews
Website View Page
0 Reply
Tyler GibsonBusiness Member
Real Estate Agent · Orlando, FL · Member since 2017 · 1k+ posts · 2k+ votes
1y
Quote from @Victor Genel:

Starting the process of placing an Ocala property in the market. It's an owner financed arrangement with a 2nd lien to a private lender. The contract requires balance payment to the lien holders by February 2026. The market has gone down during the duration of the 3 years of the contracts. I may be able to sell the property to cover the 1st lien holder (owner financed) but not the 2nd lien holder (private lender). Any advice on my options? Thanks in advance.

Are you unable to refinance the property?
[email protected]407-590-9858
GPG Team 598 Reviews
Website View Page
0 Reply
Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
1y
Quote from @Victor Genel:

Starting the process of placing an Ocala property in the market. It's an owner financed arrangement with a 2nd lien to a private lender. The contract requires balance payment to the lien holders by February 2026. The market has gone down during the duration of the 3 years of the contracts. I may be able to sell the property to cover the 1st lien holder (owner financed) but not the 2nd lien holder (private lender). Any advice on my options? Thanks in advance.
Any advice needs to know whether or not the loans have been personally guaranteed and if so you’re ability to cover any shortfall in sales price, and finally if your other assets are exposed to loss in event of a judgement or whether they are “asset protected”. Otherwise advice given may be completely incorrect. Please especially avoid those posters answering with generic AI responses that seem to cover all situations but are actually completely useless.
Private Mortgage Financing Partners, LLC
Website View Page
1 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.