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.

123 Trustdeeds

For the most part, when lenders need to analyze a loan situation, they generally rely on appraisals in order to determine their loan-to-value ratio.

When making an investment in a deed of trust, the trustor (borrower) makes the property transfer, in trust, to the trustee (independent third party). Different factors associated with each lot of land such as casements, CCRs, and location, make one piece of property different from the next. com Chapter 2 - The Basics of Trust Deeds At this point you know that a trust deed is one of the safest investments you can make that offers you a high return, but what exactly is a trust deed?

Therefore, it is imperative that you carefully read and re-read all the closing documents.
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. To begin with, they can make certain that their lien has been accurately recorded with the county recorders office. In addition, it is highly recommended that you always insist the Borrower takes personal responsibility on the promissory note. The reason is because LTV means to loan a percentage of money that is less than the actual property value. When a third party is involved, it becomes the loan servicing departments responsibility to bill the borrower for regular monthly payments. Private money loans are required by borrowers, who fail to meet guidelines set up by conventional institutions such as banks, life insurance companies and conduits.

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.
Escrow number V Should it become necessary in the future, for the investor to discuss a section of the escrow with the agent in charge, if the investor has the escrow account number it will be easier for the agent to locate the escrow file in question. It is usually common for foreclosure to start, but does not carry all the way into sale. The reason is because ALTA provides a broader range of coverage compared to CLTA. _ The security position of the owner of a trust deed is not shared with anyone. If you have any questions concerning the TILA, you can contact the Federal Trade Commission, as the TILA regulations are enforced by them. Delinquent taxes are paid 2.