mortgages and deeds
I plan to loan an employee who lives in SC money. I live in VA. He has agreed to put his house up for collateral. What do I need to do to ensure that I am covered if he defaults on the loan? Promissory note? 2nd mortgage? Lien?
2 Answers from Attorneys
Re: mortgages and deeds
As far as I know, Virginia still permits the use of the confession of judgment provision in a debt instrument whereby the debtor gives written
authority for the entry of judgment against him
in the event that he defaults on his payments.
This provision in a debt instrument ot agreement permits the creditor or his attorney to appear
in court once the debtor has defaulted and receive
an automatic judgment against the debtor. A lien,
can then be immediately filed against the debtor's property and garnishment and levy actions against salary and bank accounts undertaken.
Whatever kind of debt instrument you choose to utilize in this situation, it should contain a
provision for this confession of judgment.
Re: mortgages and deeds
As primary protection, you are correct, a note and mortgage are the answer. But, you could supplement your protection with the note further liening salary due, boats, cars, life insurance cash value assignments, etc., careful to provide that the exercise of one remedy is not to the exclusion of exercising against others. Afterall, there may be no equity in the residence. He should provide that information as well.
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