Legal
Default
Failure to meet the legal obligations of a mortgage, most commonly by missing payments. Defaulting on your mortgage can lead to late fees, damage to your credit score, and eventually foreclosure. Most lenders consider a loan in default after 90 days of missed payments. If you are struggling to make payments, contact your lender early to discuss options like forbearance or loan modification.
Why It Matters
Default carries legal significance in real estate transactions. Property law, contract law, and lending regulations all intersect when buying a home, and terms like default have specific legal definitions that affect your rights and obligations as a buyer or homeowner.
While real estate agents and lenders can explain general concepts, for questions about default that could have significant financial or legal consequences, consulting a real estate attorney is worth the $200-$500 cost. In some states, attorney involvement in real estate closings is mandatory.
Real-World Example
Legal issues related to default can surface during title searches, contract negotiations, or closing. Catching problems early is far less expensive than resolving them after you've closed on the property.
Pro Tip
If you're buying in a state that requires attorney closings (CT, DE, GA, MA, NY, SC, WV, and others), your attorney will handle default-related legal matters. In other states, consider hiring one independently for a review of your purchase contract.