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What Protection Does the Trust Deed Investor Receive?
A trust deed is a signed,
notarized legal document, a piece of paper that secures the note and
loan you make on a particular real estate property.
The deed of trust shows the names of the borrower (the Trustor) and
the lender (the Beneficiary), the loan amount, and the property that
secures the loan. The trust deed contains a "power of sale clause"
which gives the title company (the Trustee) the power to sell the
property for you, the lender, in the event that the borrower does
not repay the loan as agreed.
The trust
deed is recorded and made a matter of record in the County (public
records) where the property is located. The deed of trust is signed by
the borrower(s) and notarized, and specifies the parties, the
amount, and a legal description of the real estate securing the
loan.
Accompanying
the trust deed is a note, a promissory note, or a written promise to
pay a certain sum of money to a certain person on a certain date.
The note also states the interest rate and other terms of the loan.
The note is signed by the borrower(s).
Position is Important to Protect
The
position of a new note and trust deed, as a first, a second, a third
or even a fourth mortgage is determined only by the date and the time that
the trust deed was recorded.
For example, if you own property free and clear
today and at 12:30 in the afternoon you gave someone a note and
trust deed for $20,000 and at 12:55 you recorded it; but at 12:40
you had given someone else a note and trust deed and they had
recorded it at 12:45, then the very first note you gave out at 12:30
would become a second mortgage because it was the second trust deed to be
recorded according to the date and time.
This is why it is important
to make loans by going through a bona fide, reputable, title
insurance
company. The title company is your "Trustee," the middle man. Always
use a title company and get title insurance guaranteeing the actual
position of your loan.
Call 1-213-437-6379 toll free now for more information.
Trust Deed Real Estate Investing
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