Rescission rights for dwelling occupant

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Question:

Bob and Mary are applying for a loan that will be secured by the equity in a house they own. Currently, they live elsewhere and their adult daughter Suzie lives in the house. Since she will be impacted if the loan goes into default, shouldn’t she be entitled to a right of rescission?

Answer:

Suzie has no ownership interest in the house. She is a tenant. Whether she is paying rent or not, her status is not really different from a renter. She has no say-so about whether the property becomes encumbered by a mortgage. She has no legal right to pull the plug on the loan – or even to know about it, for that matter. Bob and Mary, as the owners, get the right to rescind.
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