Creative financing: You’ve heard of it, and, as a seller, the idea sounds pretty attractive. But, do you know everything you need to know about carrying back a second; essentially, about becoming a lender? You better know the same things that financial institutions know - you better know about lender’s title insurance.
It’s time to sell your $150,000 home, a home that you have owned for fifteen years, a home in which you have substantial equity. The loan terms call for a $20,000 down payment from your buyer, a new $100,000 loan from a local savings and loan, and for you, the seller, to carry back a note for the remaining $30,000.
Will you, the seller, need title insurance?
Yes, you will. Everyone who retains an interest in the property needs title insurance. When you took on the role of lender, you retained a record title interest which you will want to protect for the term of the loan.
But, why would you need lender’s title insurance when the repayment of your loan is assured by a lien in the form of a recorded deed of trust against the property? What could possibly go wrong?
You must insure yourself for the same reason that financial institutions obtain title insurance - for the protection of your investment. You must be assured that your lien on the property cannot be defeated by a prior lien or other interest in the property, which, if exercised, would wipe out your security.
Anything that involves the new buyer’s ownership rights to the property is of direct interest to you because you are holding the second mortgage. If such ownership rights are in question or defective, you may have trouble collecting your monthly mortgage payments. But, you say, there is nothing in your property’s history that could cause problems: no problems with easements, no problems with boundaries, no problems with rights-of-way.
Contrary to what may be popular belief, these matters are not the only source of title problems; a large proportion of title problems arise out of man’s interaction with man. The fact of a marriage, a divorce, a death, a forgery, a judgment for money damages, a failure to pay state or federal taxes - these occurrences can and usually will affect your rights as a mortgage lender.
As an example of what can befall the lender, did you know that a federal tax lien recorded against your buyer before the loan transaction is concluded may result in the loss of security in your home? Sophisticated mortgage lenders are aware of this possibility as well as many others which could jeopardize their loan security and seek the protection afforded by a lender’s title insurance policy.
If you are considering carrying back a second, be sure to get all the facts regarding the benefits of lender’s title insurance. Your local title insurance company should be happy to provide the information you need.
Article by CLTABack to Table of Contents
Dont Miss a New Listing Again!
Already registered? Login
FREE AUTOMATED EMAIL UPDATES
Sign in to take advantage of all this site has to offer. Save your favorite listings and searches – also receive email updates when listings you like come on the market for free!
*Contact Information NOT Shared*
Robin Rotella Team
Keller Williams Integrity First Realty
6641 S Kings Ranch Rd, Suite 3
Gold Canyon, AZ 85118
Robin Cell: 480-225-7445
Home | Open Houses | Our Listings | Search for Homes | Advanced Search | Map Search | Foreclosures | Commercial Search | Gold Canyon By Subdivision | Client Reviews | About Us | Local News | Meet the Team | Gold Canyon Blog | Contact Us | Real Estate News!!! | Gold Canyon Homes | Gold Canyon All Subdivisions | Homes for Sale in Gold Canyon, AZ under $200,000 | Homes for Sale in Gold Canyon, AZ from $200,000 to $300,000 | Homes for Sale in Gold Canyon, AZ from $300,000 to $400,000 | Homes for Sale in Gold Canyon, AZ from $400,000 to $500,000 | Homes for Sale in Gold Canyon, AZ from $500,000 to $600,000 | Homes for Sale in Gold Canyon, AZ from $600,000 to $700,000 | Homes for Sale in Gold Canyon, AZ over $700,000 | Mortgage Rates | Buyer/Seller Info | Gold Canyon Community Info | Natural Hazards in Arizona | FREE kw Search App | Best Local Movers
© 2019 Arizona Regional Multiple Listing Service, Inc. All rights reserved. All information should be verified by the recipient and none is guaranteed as accurate by ARMLS. Information deemed to be reliable but not guaranteed. Real estate listings held by brokerage firms other than Robin Rotella PLLC are marked with the ARMLS logo and detailed information about them includes the name of the listing brokers. Listing broker has attempted to offer accurate data, but buyers are advised to confirm all items. Only IDX residential listings are displayed on this site. The information being provided is for consumers' personal, non-commercial use and may not be used for any purpose other than to identify perspective properties consumers may be interested in. This site will be monitored for 'scraping' and any use of search facilities of data on the site other than by potential buyers/sellers is prohibited. Information last updated on 2019-02-19.