Properties with cross security

L

Liamos

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Can someone help me with the following scenario?

Property A was purchased and property B was used as cross security.

Property A is now sold and after loan is paid off, there remains a nice profit.

Will bank insist that profit from Property A be used to writedown loan on Property B?

Thanks.
 
Assumption is that the Bank have a legal charge in place over property A. If so, all net sale proceeds must be remitted to the Bank and then they release the charge. Decision to release any funds is with the Bank. In the current climate I wouldn't hold my breath on them agreeing to accept less than the full net proceeds in debt reduction.
 
My apologies, I meant to say that Property B was sold. After loan is paid off, will bank insist on Property A's loan also being reduced?

Is it the same answer? Sorry for the confusion.
 
No real change in my response. If any one of the properties held by the Bank as security is sold, the net proceeds will normaly be required to reduce the borrowings. Whether reduction is for loan A or loan B makes no real difference. All security effectivel covers all debt.
 
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