§20.12 - Transfer of the Real Property by the Mortgagor

JurisdictionWashington

§20.12 TRANSFER OF THE REAL PROPERTY BY THE MORTGAGOR

Because Washington is a lien theory state, the mortgagor is the owner of the real property that is subject to the lien of the mortgage. Parker v. D'Acres, 2 Wash. Terr. 439, 446, 7 P. 893, 894 (1885), aff'd, 130 U.S. 43 (1888). As the owner of the real property, the mortgagor can freely transfer or encumber the property by gift, sale, or further mortgage. On the mortgagor's death, the property passes to the mortgagor's heir or devisee. A transfer of the property does not divest the property of the mortgage. State Fin. Co. v. Moore, 103 Wash. 298, 174 P. 22 (1918). Various types of transfers by the mortgagor are discussed below.

(1) Transfer terminating mortgagor's liability

A mortgagor's liability may be terminated by either (i) payment of the obligation or (ii) novation. The sale of the property does not necessarily eliminate the obligation to pay the underlying obligation.

(2) Transfer "subject to" the mortgage

In a transfer "subject to" the mortgage, the vendee/transferee pays the value of the property less the amount of the debt secured by the mortgage but does not assume any personal liability for the mortgage debt. Perkins v. Brown, 179 Wash. 597, 38 P.2d 253 (1934). In a transfer "subject to" the mortgage, the mortgagee has no personal claim against the nonassuming grantee to pay the loan. Univ. State Bank v. Steeves, 85 Wash. 55, 147 P. 645 (1915). The debt is satisfied from the property first. The original borrower is not released from liability on the debt secured by the mortgage.

(3) Transfer in which the transferee assumes the mortgage

When a mortgage is assumed, the vendee/transferee pays the value of the property less the amount of the indebtedness secured by the mortgage. In this situation, however, the transferee agrees to personally pay the mortgage debt. This promise does not relieve the original mortgagor or the property from the obligation, though the effect is to change the original mortgagor's status from principal to surety.

If one assumes that the mortgage does not secure a negotiable note, the transferee becomes the principal and the mortgagor/transferor becomes a surety.

Proof of assumption. Proof of assumption may be oral or written, but it must be unequivocal, clear, and conclusive. Heggen Constr. Co. v. Turalba, 88 Wn.2d 711, 565 P.2d 420 (1977). There must be positive action on the grantee's part to assume; a mere declaration in the...

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