Lien Priority
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 person’s 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.
- Mechanic’s liens.
- IRS liens.
- Judgment liens.
- Etc.
Related posts:
- Typical Borrowers II
- Trust Deeds Basics
- Typical Borrowers
- Trust Deed | Title Insurance Policy
- Trust Deeds | What is insured by policies?
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What is a deed of Trust ?
A deed of trust, also known as a trust deed, is a unique form of loan
recorded within public records as a deed that has a lien on the property. Trust
deeds are used by borrowers instead of conventional mortgages. This is usually
done in order to obtain greater flexibility on the loan that would be available
under the rules and regulations in standard lending institutions such as banks.
With a deed of trust, there are three main parties involved. These parties
include the trustor - which is the person who is borrowing the money - the
beneficiary - also known as the lender - as well as a neutral third party. This
third party is the trustee, who temporarily holds part of the property title
until the loan is paid in full.