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.

Mortgage Versus Deed Of Trust New Mexico

Now thats a difference worthy of your attention.

Some of the liens an investor may encounter include:_ Tax liens _ Mechanics liens _ IRS liens _ Judgment liens _ Etc. The investor should check with the escrow agent to ensure that when the close of escrow occurs, an endorsement will follow. The reason is because if you use your Pension Plan or IRA, your income is tax deferred and can increase faster, as you will not have to pay taxes so you will have more money for gaining interest.

_ Declaration of Default (DOD) Notice of Breach (NOB) and the election to sell under the deed of trust.
(Note: Keep in mind that each state may have their own process of foreclosure, so the following information may not apply to your area)1. A mortgage investment is not as liquid as a stock or bond. However, it is not uncommon for some mortgages to have higher yields.

As you can see there are many legal issues for investors to consider before they invest in a deed of trust.
As soon as the officer obtains all of this information, they will then be able to organize the foreclosure documents and prepare for the process. 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. Notice request V A notice request must be placed in the agreement to make sure that the investor will be notified should a default action start on one of the previous loans. The TILA was amended in 1994 and was created in respect to loans that are secured by a borrowers principal property. Not only is this an efficient means of collecting on a trust deed and a note, but it is more beneficial to the investor when there is a third party involved in the note and deed of trust, because the borrower simply has to make a single payment out to the servicing officer, instead of payments to multiple investors.