My husband and I would like to get either a HELOC or Home
Equity Loan to consolidate our debt. Another party has a second deed of trust on the property. There are no loans on the property itself. Would the second deed of trust party need to sign documents on the HELOC or Home Equity Loan? Would we have to let that person know we are taking out one of those on the house?
The deed of trust is a lien on the property. In some states it would be extinguished if there is no debt or other obligation secured by it. Assuming the deed of trust is still enforceable, the lender from which you hope to obtain HELOC financing will discover the existence of the deed of trust and you can expect that the lender may require that the holder of the deed of trust release it or subordinate it to the deed of trust that you will sign in connection with the HELOC.
Check the wording of the current deed of trust to find out whether you have to notify its holder. If you still have questions, consult with an attorney familiar with real property law in your state.
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The deed of trust is a lien on the property. In some states it would be extinguished if there is no debt or other obligation secured by it. Assuming the deed of trust is still enforceable, the lender from which you hope to obtain HELOC financing will discover the existence of the deed of trust and you can expect that the lender may require that the holder of the deed of trust release it or subordinate it to the deed of trust that you will sign in connection with the HELOC.