Legal Question in Real Estate Law in Illinois

Take your paperwork and see a lawyer!

It sounds as though you bought a condo w/ Mr. X and put title to it in both his and your names (joint tenancy), but you alone signed a "mortgage" - perhaps because he had no credit? At the same time you made a contract with him (really a loan, but you do not say if you put a junior/second mortgage on the condo) for him to both pay the main mortgage as well as pay you back the money you loaned him (which sounds like the down payment). Mr. X has stopped paying you the money you lent him back; you don't say whether he is paying on the "mortgage" but he hasn't "transferred" the mortgage into his name. It sounds like your "loan" to Mr. X was a "side deal" that the lawyer who closed the purchase for you was not aware of; if he or she was, you ought to see him or her first.

First, if the "mortgage" was made in favor of a bank or other lender like a Bank of America or Wells Fargo (examples ONLY), and your arrangement with Mr. X was NOT disclosed to the bank or lender, this could be lender fraud and may depend on the paperwork you have for your loan to Mr. X. And it sounds as though you put yourself on title as your security, so a court might say that your ownership is only a mortgage interest itself.

Second, while Mr. X didn't have the credit for a loan in the first place, you don't say how long it's been since you bought the condo and loaned him the money. If he has been paying the "mortgage" that's good, but it doesn't mean he qualifies today for his own mortgage. Therefore asking him to "transfer" it to himself may be impossible -- lending today is much stricter than it was say a year or so ago. Plus, if you were to take your name off title, you would most likely be violating the mortgage since the lender expects you both on title and the lender might be able to call the mortgage in -- and if so could you get another mortgage today to pay that one off?

Third, if a court sees YOUR loan plus title as a mortgage it might make you foreclose your loan instead of just being allowed to sue Mr. X for the money, in which case you might be obligated to foreclose on the main loan as well, and that could put you in the same position as above -- the "mortgage" lender might be able to call its loan.

The real issue here is that there could be significant negative credit consequences to YOU. So whether you call it "Real Estate and Property" or "Contract Law" is really quite irrelevant as each is mixed with the other -- a loan is a contract and so forth. But until a lawyer reviews the paperwork, the situation and looks to see how courts may interpret the situation in recent cases, this is a time bomb.

Good luck.