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.
Can The Lender Act As Trustee In A Deed Of Trust
Some of these laws include, but are not limited to the following: _ The investor must have their loan serviced by a mortgage loan broker (MLB) and have a written agreement.
What about IRAs and other Retirement Programs? Coppercrest Funding provides investors with many unique opportunities to invest in trust deeds. Furthermore, the investor should also make it a point to ask questions in the event they discover certain wording or restrictions they fail to comprehend. _ Only under limited circumstances is the MLB allowed to self-deal.
Speak to qualified professionals, and dont be afraid to ask questions, or rethink your decisions before making an investment.
The title attorney or escrow agent will ensure that the exchange of documents and funds runs smoothly. Once you have completed all of the necessary instructions and requirements for escrow, and it begins to take its normal course, you are now ready to close escrow which is often referred to as close of escrow, closing or settlement. 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. 00 and . However, if an escrow involves tax and legal problems and is extremely technical, than the investor should seek the advice of an attorney. And remember, make sure the loan servicing company you choose has experience, integrity and a good reputation.
It is not uncommon for a borrower to try and convince, or pressure a lender to give some slack in regards to terms and due dates for payments.
Begin by taking the percentage, in this case 1. At some point in your life you will retire, and like many other investors out there, you may be thinking about investing as part of your retirement plan. No defects, encumbrances, or recorded liens appear on the title. |
