Is a land split valid if done after the parent parcel is mortgaged?

I recently purchased a foreclosed home on 19 acres through Freddie Mac. The original 19 acre parcel was split into two parcels of 8 and 11 acres after it was mortgaged by the previous owner. The previous owner then transferred ownership of the vacant 8 acre parcel to his father. The legal description of the property foreclosed on describes the parent parcel of 19 acres. Now that I have closed on the house with two parcels totaling 19 acres the father of the previous owner is claiming he has been paying taxes on and still owns the 8 acre parcel. The title search came back clear when I mortgaged this property. Does the father have a legal claim to the property even if the bank foreclosed? To the best of my knowledge neither parcel was refinanced after the split and transfer.

1 Answer


The real estate law that will govern the answer to your question depends upon the state law in which the property is located. In general though a foreclosure extinguishes an owner's interest in a property where the owner gives the property as a security interest or when an owner acquires an interest in the property after a security instrument has been recorded.

For example an owner is deeded a property (purchases the property) and to pay for the property obtains a purchase money loan secured by a mortgage or deed of trust on the property. The deed to the owner is recorded in the public records along with the security instrument (mortgage or deed of trust). If the owner does not perform per the terms of the loan the lender can foreclose and extinguish that owner's interest in the property.

The foreclosure will also extinguish the interest of any owner whose interest was deeded to them after the security instrument was recorded. Their ownership of the property is "subject to" the lien on the property.

Even if a loan to purchase a property is refinanced the new security interest may be a "renewal and extension" of the original lien. Additionally, just to be clear, a lender would probably require any owners that obtained their interest after the purchase loan to sign the new security instrument.

So it is likely in the situation you describe that any interest the father had in the property was extinguished in the foreclosure. Of course to know for certain in your specific situation requires a professional to review all of the legal documents and the public records.

You say that there was a title search performed when you purchased the property, but it is not clear that you obtained title insurance. If you obtained title insurance you can contact your title company to see if you are covered and if the father asserts a claim they should defend your interest in the property. Otherwise contact the attorney that performed the title search. They should be willing to defend their title opinion.

You do want to pay attention to whether the father continues to assert a claim and pays the taxes on the parcel since that could lead to a claim by adverse possession even though it is highly unlikely.