Blanket Liens in Bridge Loan Transactions
In some California bridge loan structures, particularly cross-collateralized transactions, the lender may record a blanket lien covering both the departing residence and the new property being purchased. This gives the lender a security interest in both assets and provides additional protection if the loan is not repaid as expected.
A blanket lien is legally similar to recording separate liens on each property, but it is structured as a single instrument covering multiple parcels. Lenders and title companies in California handle blanket liens regularly in bridge loan transactions where two properties are involved.
Blanket liens most commonly appear in bridge loans when the lender requires collateral from more than one property to reach the needed loan amount. A borrower whose single property doesn't support enough LTV to cover the bridge amount may use both properties as collateral, resulting in a blanket lien structure.
Releasing Properties from a Blanket Lien
When the departing residence sells, the lender releases the lien on that property so the sale can close. This partial release is a standard process. The lien on the remaining property (typically the new home) stays in place until the bridge loan is fully repaid. Title and escrow companies coordinate this process routinely in California bridge loan closings.
Borrower Considerations
If your bridge loan is structured with a blanket lien, selling either property during the loan term requires the lender's cooperation and a partial lien release. Plan for this coordination in your exit timeline. Most direct lenders, including North Coast Financial, move quickly on partial releases when the borrower is ready to close the sale of the departing property.