Escrow & Title
A buyer who takes title 'subject to' an existing mortgage (rather than assuming it) has what liability for the mortgage?
AFull personal liability for the mortgage debt
BNo personal liability — but risks losing the property if the original mortgagor defaults✓ Correct
CLiability limited to the equity in the property at purchase
DEqual liability with the original mortgagor
Explanation
When a buyer takes title 'subject to' an existing mortgage, they acknowledge the mortgage exists but do NOT assume personal liability for it. If the property goes into foreclosure, the buyer may lose the property, but the lender cannot sue the buyer personally for any deficiency. The original borrower retains personal liability. In contrast, when a buyer 'assumes' a mortgage, they become personally liable. Oregon lenders should review for due-on-sale clauses that can be triggered by taking title subject to.
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