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.

California Trust Deed Service

Chapter 11 - Escrow When you fund a loan or purchase a promissory note, this transaction should be done through escrow.

There are different loan documents that secure an investment. This is a fact you wont want to forget should a tax lien appear. Is a Mortgage Investment more Trouble than its Worth? Another reason is the borrower destroyed the property value by removing or demolishing the building(s), or by failing to keep the property in top condition.

The instructions for escrow that you will be requested to sign could be unilateral (separate set of instructions for the buyer and separate ones for the seller) or bilateral (one set of instructions for the seller and one for the buyer).
) if they fail to pay the loan. Begin by taking the percentage, in this case 1. Because unlike other forms of insurance that provide coverage for unpredictable occurrences that could possibly happen in the future (such as life, health or casualty insurance), title insurance protects the party insured from loss that results due to events that happen before the effective date of the title insurance policy. Likewise, as far as non-owner occupied homes are concerned, the LTV should not exceed 50% You should never rely on future promises regarding improvements unless the proper draws for the upcoming work that is to be completed is officially set up.

The reason is because ALTA provides a broader range of coverage compared to CLTA.
As soon as the lender is in possession of these documents, they will then release to the title or escrow agent their loan proceeds. BorrowersAnother important aspect of the underwriting process is finding out how the borrower intends to refinance the loan in regard to the loan terms that have been specified in the promissory note. Once prepared, the officer will have all beneficiaries involved sign the DOD, NOB, SOT and the Non-military Affidavit with the attached notarization. If the property meets their equity requirements, Coppercrest Funding will then carefully analyze the borrowers personal characteristics, as well as their ability to repay the loan, and the project viability.