Escrow & Title
In Maine, if a property is sold with an existing tenant whose lease predates the new mortgage, the tenant's lease:
AAutomatically terminates at closing
BMay be superior to the mortgage (senior lease) and must be honored by the new owner✓ Correct
CIs automatically subordinated to the new mortgage
DIs void if the tenant was not notified of the sale
Explanation
A tenant in possession under a lease that predates a new mortgage typically has superior rights that must be respected. SNDA agreements or subordination agreements address the relationship between leases and mortgages.
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Key Terms to Know
Contingency
A condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Short SaleA sale of real property where the sale proceeds are less than the outstanding mortgage balance, requiring lender approval.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
DeedA written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
State-Specific Concepts
DRE Regulation
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