Chapter 9 - Lien Priority

You may or may not be aware, but a deed of trust is actually a lien on a piece of real property. What is a lien? A lien is a legally recognized claim or hold against one persons item by another which utilizes this item as security for a duty, debt or obligation. If there is more than one lien on a piece of real property there could be a number of reasons for this. Some of the liens an investor may encounter include:

? Tax liens
? Mechanics liens
? IRS liens
? Judgment liens
? Etc.






A few interesting facts about liens
It is important for you to know that liens in first priority are the most ideal. Therefore, in order to obtain this priority, this needs to be verified before the closing of escrow. In order to obtain the accurate information that is required to verify the priority of the deed of trust, you will find that Title insurance policies will provide you with what you need to know.

If it happens that an error is made, or a lien has been overlooked and such aspects affect the trust deed holder, then the holder can take legal action against the company that issued the title insurance policy.

When the holder is in possession of the priority lien, they can foreclose and any junior lien holders wont be able to stop it. That being said, there are ways in which junior lien holders can protect themselves should this happen.

To begin with, they can make certain that their lien has been accurately recorded with the county recorders office. They can also inform all senior lien holders about their lien, and ask them for written notification before they foreclose.


Tax Liens
Tax liens have priority over deeds of trust. This is a fact you wont want to forget should a tax lien appear. Thus, in order for the investor to protect themselves in the event of a tax lien, a provision should be added in the trust deed and note that explains if the borrower and their property have or will receive a tax lien; it is the trustors responsibility to contact the investor.

In addition, the note should provide the investor with the choice of needing the payoff, so that they can protect their principal from foreclosing on the tax lien.

Trust Deed Investments Inc

Dont forget, the more you learn about trust deed investments, the safer the risk and the higher the potential for excellent return.

Certain liens are removed 3. Trust deeds can be traded4. This clause indicates that full payment of the loan is required to be made upon liens, change of ownership or a transfer. The holder of this not is protected by the law, as they are considered to be in good faith holding this negotiable note. A mortgage investment is a great investment for your Pension Plan or self-directed IRA (Individual Retirement Account).

Sometimes, in order to avoid the selling of their property through foreclosure, a borrower will try to obtain protection from what is known as an automatic stay.
Your check should be given directly to your attorney or the Title Company. Take the time to research everything you can about trust deed investments. That being said, a person may choose to recourse a note so that the payment goes to one individual in particular and no one else. Now thats a difference worthy of your attention.

You need to understand that while some notes can be negotiable, others are not.
Once prepared, the officer will have all beneficiaries involved sign the DOD, NOB, SOT and the Non-military Affidavit with the attached notarization. 00 would become 63. When the holder is in possession of the priority lien, they can foreclose and any junior lien holders wont be able to stop it. Finally, when it comes to a construction loan, construction control is imperative to any construction project. The following is a list of notes: The Promissory Note - This is a common note, and as the name suggests, it is the borrowers written promise that they will pay a specified amount of money, installments of money, or money on demand to a named person, in the future, at any given time. Furthermore, contracts are reviewed to make certain that borrowed funds are sufficient to complete the project.