Payoff demand during escrow

[Wai Chan]

There are multiple deed of trusts recorded on a CA property that is now under escrow. If the contract price cannot cover all the payoff demand, can the seller still close the escrow? What would happen in this kind of situation? Can you give me some suggestion?

[Chris Mason]

Originally posted by @Wai Chan:

@Chris Mason Thank you for the response. I am actually one of the deed of trust holder. Does it mean the seller will not be able to close the escrow if he cannot satisfy all the payoff demand? In terms of getting paid? Does everyone who hold deed of trust have the same priority of getting paid for the loan? Does it matter if my payoff demand is higher or lower? It is not a foreclosure sale. It is a normal transaction. 

Assuming a buyer that wants title insurance, or that is using a traditional mortgage, the seller cannot sell without you signing off on not getting paid what is owed to you.

In the event of foreclosure, deeds of trust are prioritized in the order in which they were recorded. So if they have a traditional mortgage they got when they bought it, then they got a HELOC, then the IRS recorded a lien for unpaid taxes, then you lent them money... you would be 4th priority.

(I am not a lawyer talk to a lawyer etc)