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  • Reconveyance Oregon

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    I am a builder with a contract that the landowners assigned to the construction lender to use as collateral for the loan. My contract amount is listed under first lien with the date in the lender's Commitment executed in escrow. My contract (which was for a house to be built $251,009) was used as the Collateral to secure the loan and was stated in the Construction Loan Agreement with the Borrower and the Lender as an obligation.

    The Trust Deed (it was an all-in-one closing from construction to perm.) has a Construction Rider and Adjustable Rate Rider. The Construction Rider incorporates the Construction Loan Agreement and the Security Agreement (The Contract obligation along w/ all plans and specifications listed thereunder). The Construction Loan Agreement with my company name and address on it, listed under the borrower name supersedes all other documents in the event of a default. It is so stated.

    My question is this:

    When a construction mortgage uses the debt. of their borrower for collateral to secure the loan and recognizes the contract and is assigned all rights of the contract, includes the contract date, amount, and description, doesn't this require the release of my lien in order for the lender to reconvey the property to permanent loan? There hasn't been any reconveyance,yet, but their borrower just filed for bankruptcy and I am still owed money on my contract in the constuction loan agreement and commitment. This is what it looks like but I don't have the legal sophistication to completely understand. When the borrower defaults (in this case it is because the borrower lied on the loan application and didn't even have a job) do I just give the escrow trustee in charge of the construction trust account or the construction mortgage lender a notice of default under the commitment, construction loan agreement, construction rider and trust deed?

    Any advice would be appreciated as I live in a town with 200 people.

    Thanks

  • #2
    The best thing we can suggest is that you consult a local attorney who can review all of the applicable documents in the case. No one here can comment on contracts and agreements that we haven't read.
    I am not able to respond to private messages. Thanks!

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    • #3
      Thank you. I have done that. Our ex-attorney filed a materialman's lien against our own security interest. We will see how the bank will handle it when time passes as they will not be allowed to reconvey without us signing off our interest in the Completion Notice and final draw closing.

      I do appreciate your reply.
      cc

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