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 Recording Service Las Vegas Nv

With a mortgage investment you have control over when you receive your checks, which allows you to obtain your money as quickly as possible.

There is no question that some borrowers will do everything in their power to try and avoid and delay making payments. Inspections to Protect Investment V It is imperative that frequent inspections are conducted in order to protect the lenders investment. Acceleration Clause V An acceleration clause should be apart of the escrow documents. The borrower could loose their property (home, land, etc. In addition, Coppercrest Funding is pleased to see this same development of trust blossoming with their other investors, and always look forward to developing future relationships with new investors. After the sale, there is no equitable right of redemption to the trustee or any other possible junior lien-holder.

Know the market value and equity of the real property, as well as your loan security.
You need to understand that not every company functions the same. Make sure you understand all legalities concerning trust deeds before you make your investment. While most investments are made with the same end in mind, the main difference between each investment type are the strategies and the level or risk involved. Note: Property can also be foreclosed by a senior lienor or through a deed in lieu. A trust deed is used as security for a loan on real property, and the specifics regarding the loan are written in a promissory note. The TILA was amended in 1994 and was created in respect to loans that are secured by a borrowers principal property.

What is a lien?
Include important conditions V Should a late charge be included as part of the note, the investor needs to ensure that the conditions regarding the late charge, are included in both the escrow instructions and the note. With a construction loan, there are certain aspects that must be followed to ensure that everything goes according to plan. Speak to qualified professionals, and dont be afraid to ask questions, or rethink your decisions before making an investment.