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

Should a borrower file for bankruptcy, it is always in your best interest to respond as quickly as possible to ensure that you receive full payment of the amount owed to you.

Thus, from a lenders perspective, while providing a loan may seem like a sensible transaction, due to the fact that its classified as subprime, it requires private money lending. As far as monetary is concerned, the defaults include are as follows: _ Nonpayment of a balloon payment (when all the payment is due at one time)_ Advancements for each provision of the trust deed in regards to insurance or taxes. For instance, the lender needs to consider inspections and lines.

If this action can not be performed, it may become mandatory that you seek the service of an attorney.
_ Declaration of Default (DOD) Notice of Breach (NOB) and the election to sell under the deed of trust. 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. 1 = the 10% annual yield. The prelim is created from an itemized list of exceptions (title facts). The prelim is created from an itemized list of exceptions (title facts).

Understand loan servicing authority, provisions and compensation.
) Borrower is in unfortunate circumstances that make it difficult for them to obtain bank assistance, circumstances such as: _ Poor credit _ Bankruptcy _ Irrevocable Trusts, etc. Some of these conditions include, but are not limited to V 1. (Note: this is calculated by using the same method as the previous example, except that the 10% is calculated as 1. After 20 years, the 0. It is usually common for foreclosure to start, but does not carry all the way into sale. If you have any questions concerning the TILA, you can contact the Federal Trade Commission, as the TILA regulations are enforced by them.