In a financing situation where a buyer assumes a seller's existing loan, what is the buyer's liability?

In a financing situation where a buyer assumes a seller's existing loan, the concept of liability is crucial to understanding the obligations of the parties involved. When a buyer assumes a loan, they effectively take over the mortgage payments and the responsibility for that debt as if they were the original borrower. This means that the buyer has primary liability to the seller's lender.

Primary liability indicates that the lender can look to the buyer first for payment on the loan. This is significant because it places the initial responsibility on the buyer to ensure that the mortgage payments are made. If the buyer defaults on the loan, the lender has the right to pursue the buyer for any amounts due.

In this scenario, the seller may have had the original obligation to the lender, but once the loan is assumed, the buyer's assumption shifts the primary liability to them. The seller is typically no longer on the hook for the loan in terms of primary responsibility, but they may still be held secondarily liable depending on the terms of the loan agreement or if the lender did not fully release the seller from liability upon assumption.

Therefore, in cases of loan assumption, the buyer assumes the primary liability, making them primarily responsible for ensuring the loan is satisfied.