## Facts

- Fred Middleton (plaintiff) owned a strip mall that was encumbered by a mortgage held by Equity Bank.
- Middleton agreed to sell the strip mall to Herb Hancock (defendant).
- The written sales contract stated: “Purchaser agrees to take over payments on the existing loan.”
- The deed transferring title to Hancock stated that the property was conveyed “subject to a mortgage loan.”
- After the closing, Hancock fell behind on the mortgage payments.
- Equity Bank contacted Middleton (the original borrower on the loan) and demanded that he make the delinquent payments.
- Middleton paid the past-due amounts to bring the loan current.
- Middleton then sued Hancock seeking to recover the amounts Middleton paid to cure the delinquency.
- The trial court granted Hancock’s motion to dismiss Middleton’s complaint.
- Middleton appealed from the dismissal.

## Issues

1. When a sale contract says the purchaser will “take over payments” on an existing loan but the deed conveys the property “subject to” the mortgage, does the seller state a claim against the buyer for reimbursement after the seller cures arrears following the buyer’s default?

## Decision

- The trial court granted Hancock’s motion to dismiss Middleton’s reimbursement action.
- Middleton appealed the dismissal.
- The publicly available summary of this case does not provide the appellate court’s final holding, reasoning, or disposition.

## Legal Principles

- “Subject to” mortgage language in a deed commonly indicates that the buyer takes title with the mortgage as an existing lien, without, by that phrase alone, becoming personally liable on the underlying debt.
- A buyer’s personal obligation to pay an existing mortgage debt generally requires a clear agreement to assume that debt (for example, express assumption language), rather than mere acknowledgment that the property remains encumbered.
- When a contract for sale and a deed address the mortgage in different terms, the dispute may turn on whether the buyer made an enforceable promise to pay the debt and whether that promise can be enforced by the seller after closing.
- A seller who remains liable to the lender and pays amounts demanded because of the buyer’s nonpayment may seek recovery from the buyer on a contract-based theory (if the buyer promised to pay) or a reimbursement-type theory, depending on what obligations the transaction documents created.
- On a motion to dismiss, the court evaluates whether the complaint’s allegations, taken as true, state a legally recognized claim for relief.

## Conclusion

Middleton v. Hancock involves a strip-mall sale in which the contract stated that the purchaser would “take over payments on the existing loan,” while the deed conveyed the property “subject to” the mortgage; after the buyer fell behind, the lender demanded payment from the seller as the original borrower, the seller cured the arrears and sued the buyer to recover those amounts, the trial court dismissed the complaint on the buyer’s motion, and the seller appealed, though the publicly available summary does not disclose the appellate court’s final resolution.


Middleton v. Hancock, 1599 S.E. 2d 1 (2014)