Great Land Investment Company owned vacant land that it intended to develop into a residential subdivision. Great Land had borrowed money to buy the land from Big Town Bank and given Big Town Bank a mortgage on the land. Great Land sells the property to Quality Homes who intends to develop the land. The land is transferred to Quality Homes “subject to” the Big Town Bank Mortgage. Quality gets into financial trouble and cannot pay the loan. Big Town Bank wants to sue Quality Homes for the full amount of the unpaid debt. Will Big Town Bank be successful in this action?

Fill in the blank(s) with the appropriate word(s).


Big Town Bank cannot sue and recover payment of the debt from Quality Homes. When land is sold “subject to” a mortgage, the buyer does not assume personal liability for payment of the mortgage debt. The mortgage remains an encumbrance on the land and can be foreclosed if the debt is not paid. Big Town Bank can foreclose its mortgage and sell the land to pay its debt, but cannot sue Quality Homes personally and recover its debt.

Legal Studies & Paralegal

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