If your in-laws recently filed a trust deed to secure their $200K note, it will be second in line to be paid should you sell. That party will receive whatever sale proceeds are available after your 1st TD holder is paid off and closing costs. This may or may not be $200K.
The above statement is only relevant if you and your ex wife did NOT take out any HELOCs or 2nd TD’s in the interim, that is, before your in-laws recently filed their 2nd trust deed. In this case, you in laws would be third in line to be paid upon sale.
If the $200K was purchase money (that is, used to purchase the condo), then your former in-laws must accept whatever proceeds paid to them in a foreclosure sale. They will not be able to after you for the difference in this instance, but in order for them to be forced to legally accept less, you will have to let it go into foreclosure.
If you list the property for sale and any of the lienholders refuse to sell short, the sale will not go through.
It sounds to me like you kept the condo in your dissolution because of an emotional attachment to it. That’s not such a good idea under those circumstances, IMO. In your Marital Settlement Agreement, you apparently agreed that your ex would not be liable to help pay her parents back but yet she signed the note and IS legally liable to pay it back.
If I were you, I would consult a better attorney on this thorny problem than the one that represented you in your dissolution.
