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.

The Ultimate Guide To Trust Deed Investing

In order for a note to have negotiability, the note must have the option of unconditional promise to pay, without contingency, which is based on the future actions of the borrower.

The loan-to-value principal is what makes carrying a high yield with a trust deed investment secure. Understand the escrow process. 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. 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. Therefore, a ,000 loan to a property worth 0,000 has a 70% LTV.

For more information about Coppercrest Funding, or if you would like to learn more about becoming an active trust deed investor, you can visit them online today at www.
In the event that the borrower fails to solve their problems, regardless of the reason, the loans margin of equity proves to be helpful as it enables the lender to absorb the cost to solve whatever problems have occurred. However, although a deed of trust acts like a mortgage, it is important that you understand there are differences between a mortgage and a deed of trust. In order to keep your original note and deed of trust safe, you should place them in a safety deposit box at your bank. It is also their responsibility to enforce on the borrower the loan agreement terms, so they respond in a proper and timely manner. The funds for these short term loans that are provided by Coppercrest Funding, come from a variety of sources that include, but are not limited to, individual investors, hedge funds, pension plans, trusts, IRAs, and REITs. An attorney will also be required to respond to the Temporary Restraining Order.

Is a Mortgage Investment more Trouble than its Worth?
Borrowers know that when they receive a fast response from the third party in regards to their lack of payment, that the loan servicing department has zero tolerance for such behavior. Know how to recover your investment when the borrower does not meet payment. There is no question that some borrowers will do everything in their power to try and avoid and delay making payments. 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). In fact, of all the investments you can make, mortgage loans are rated as one of the safest.