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.

Why Trust Deed Investing

Aside from the security of real property, with a trust deed investment, the other advantage is the investor receives higher than average rates of return.

This includes the square footage of the land, the description of the building(s) or improvements, operating statements, rent rolls and income property. As you can see, using a third party when investing in a deed of trust acts in your best interest, and is something you should seriously consider before you decide to make a trust deed investment. Aside from the security of real property, with a trust deed investment, the other advantage is the investor receives higher than average rates of return.

Keep all documents and important papers that describe, and provide evidence and security for the loan, in a safe and accessible place.
Understand loan servicing authority, provisions and compensation. The Amortized Note - the amortized note is often used for real estate transactions. Those that use unilateral escrow instructions generally sign at the end of the escrow term, while those that use bilateral escrow instructions usually draw up and sign in the initial opening of escrow. The successful purchaser receives a signed trustees deed, which is recorded at the county recorders office by the trustee under the trust deed. The best way to ensure that you avoid pitfalls is to learn as much as you can about trust deed investing and everything it involves.

Tap the equal button 20 times in order to compound the 20 years.
coppercrestfunding. 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. When the holder is in possession of the priority lien, they can foreclose and any junior lien holders wont be able to stop it.