Prior to January, 2020, as a creditor with a lien on real property, you could not obtain a payoff directly from any other lien holder on the same property, without obtaining consent from the borrower. However, under House Bill 2459, effective January 1, 2020, a person, or agent of a person, that holds a lien on real property may now request an itemized statement of the amount necessary to pay off another lien that is an encumbrance on the same real property. The purpose of this law is to allow junior lienholders to evaluate senior liens prior to foreclosure.
The itemized statement must include the per diem interest that accrues after the date of the statement. “Encumbrance” is defined as a claim, lien, charge, or other liability that is attached to and is binding upon real property as security for payment of a monetary obligation; or a reservation of title to real property under a land sale contract. The one exception to providing the statement is if an existing state or federal law that requires the obligor’s consent, then consent is required before providing the statement. If consent is required, then the person being asked for an itemized statement need not provide the itemized statement.
The difficulty with this statute is that the responding creditor must be careful to ensure that there is no obligation to obtain consent. To cover this issue, Lenders may want to include consent directly in loan documents.