Understanding Legal Descriptions of Real Property

A Legal Description (also known as Land Description) consists of the written words which delineate a specific piece of real property. In the written transfer of real property, it is universally required that the instrument of conveyance (in California, a Grant Deed) include a written description of the property.
IMPORTANT TITLE TIP:
It is the Legal Description and the corresponding Assessor’s Parcel Number (APN) that is insured by Title Companies, NOT the property’s address. It is important to note that the Post Master and Tax Assessor employ two different means of classifying property.

Understanding the Subordination of a Second Mortgage

What happens when you refinance and you have a second mortgage?

Homeowners often miss this important point about having a second mortgage, home equity loan, or home equity line of credit.

If you refinance your existing first mortgage, the lender that holds the second mortgage lien must sign a subordination agreement, or this second loan must be paid off with your new mortgage.

A subordination agreement basically says that the lender agrees to stay in second lien position on the property’s title while the new lender assumes the first position. Your refinance loan cannot close until this signed legal document has been received by your lender. It’s important that your lender know upfront that you have a second mortgage so they can expedite the process. You don’t want this condition to delay funding especially once your mortgage rate has been locked!

Subordinating a second mortgage can have other issues, requirements and guidelines which vary from lender to lender. There is a fee for the subordination of second loans which also varies from lender to lender.

Certification of Trust: When and Why is one Necessary?

One of the main purposes of forming a Living Trust is to keep the terms of one’s property and its disposition private. If a property owner is required to give the Living Trust Documents to everyone who asks when re-titling assets, this purpose is defeated.

In the state of California a Certification of Trust is used in place of the trust itself whenever proof of its terms is needed.

It should be signed under oath and include the following provisions:
Legal name. The legal name lists the names of all Trustees, the trust name and the date it was signed.
For example: John Smith and Jane Smith, trustees of the John and Jane Smith Revocable Living Trust dated December 6, 2011.
Date the agreement (trust) was created
The name of the Grantor;
The name and address of the current trustees;
A statement as to whether the trustees are authorized by the document to sell, convey, pledge mortgage, lease, or transfer title to any interest in real or personal property and if so are there any imitations;
Whether the agreement is revocable or irrevocable;
A Certification statement to guarantee the voracity, correctness and authenticity of all claims being made in the document by the true and rightful representatives of the trust.

Certifications of Trust should be signed by all trustees, not the Grantor.
They must also be notarized.

Adding Someone to Title

We often hear of individuals who want to add another person to the title of their home. Sometimes it is a parent who adds a child, other times a party with poor credit is added after close of escrow and there are dozens if not other applications for this type of activity. While there is nothing wrong with this practice, use of an uninsured grant deed can be fraught with problems.

When someone receives ownership in a property without consideration, by Deed that is recorded but not insured by a title company, the title company insuring the next transaction, whether resale or refinance involving said property may require that the Grantor (Seller or Giver) sign an Affidavit of Declaration of Uninsured Deed before a Notary Public other than the Notary who notarized the uninsured Deed of record. This is to insure that the property was not conveyed fraudulently or under duress. Unfortunately, there are more and more forgeries occurring these days and the title companies are becoming extra careful when issuing title insurance.

Uninsured Grant Deeds = Tons of Problems

Among the many disadvantages and potential pitfalls to uninsured grant deeds, here are a few of the most common ones:

• The signing of an uninsured grant deed or quitclaim does not release the grantor from a deed of trust/mortgage. Similarly, if the home should go into foreclosure, only the grantor whose name is on the loan can petition a short sale negotiation. The lender will only discuss the loan with the trustor/borrower of record.
• Once an uninsured grant deed or quitclaim is done, it is difficult to undo. Even the slightest omission of information with regard to the vesting or legal description can create a huge cloud on title.
• When there is a recorded change of ownership on a property, that property is subject to property tax re-assessment by the County Tax Assessor.

It is a good idea for all parties involved to consult their lawyers before finalizing an uninsured (grant or quitclaim) deeds. Lawyers can provide advice about the implications of the specific situation, and they can draft a document which is accurate, appropriate and fully suited to ensure that there are no complications in the future. It may also be advisable to contact an accountant to discuss the financials implications of such deeds.

Good News for Short Sale Seller

Governor Jerry Brown signed into law Senate Bill 458 earlier this year. SB 458 extends the protections of SB 931 (2010), to ensure that any lender that agrees to a short sale must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans.

Under the 2010 law SB 931, a first mortgage could accept an agreed-upon short sale payment as full payment for the outstanding loan but unfortunately for the would be seller, that rule did not apply to a junior lien holder. SB 458 extends the protections of SB 931 to any junior loans secured against a dwelling of 1 to 4 units.

Understanding A Deed of Foreclosure

A Deed of Foreclosure, also known as Trustee’s Deed Upon Sale or a Trustee’s Deed Under Sale. As one would guess, this deed is prepared after a property’s foreclosure sale is recorded in the county were the property is located. The Trustee’s Deed transfers the property to the buyer who purchased the foreclosed pro0perty at auction.

California foreclosure law states that on the day that has been established for the sale of the property and only after all publication period requirements have been met (NOD and NOT periods); the property is sold to the highest bidder for cash for the full amount of the debt plus foreclosure fees and expenses. If nobody bids at the Trustee Sale, the property automatically reverts to the beneficiary (typically the bank) for the dept owned.

Note that the successful bidder at a Trustee Sale receives a Trustee’s Deed Upon Sale, which conveys full ownership of the bundle of rights but comes with no guarantee’s that the title is clean. The property may be in default on taxes, have a mechanic’s lien or other encumbrances. Trustee’s deeds come with many risks and title insurance cannot be purchased to cover them.

Do I Need to Homestead My Home

A Homestead Declaration is a document used to declare your homestead and obtain certain protections for some of the equity that may exist in your home. In California, a Homestead is a special provision to allow homeowners to protect their property from forced sale to satisfy their debts within certain limits.

The following definitions are useful in helping you better understand Homestead Declaration:

Home Equity: is the value of the house that exceeds all liens and encumbrances. It is determined by subtracting the total of the leans and encumbrances from the market value of the property. For Example, if a property has a market value of $500,000 and there is $350,000 owed on the property, the home equity equals $150,000. If the property’s value stays consistent, equity still increases if the homeowner is paying down the mortgage.

Judgment Lien: Generally, a judgment lien on a home or other real property is created when an abstract of a money judgment is recorded with the county recorder in which the property is located. A judgment line helps the judgment creditor collect their judgment against the judgment debtor.

Judgment Creditor and Judgment Debtor: Someone who has sued a homeowner and obtained a judgment against them is called a judgment creditor. The homeowner would be the judgment debtor.

Exemption: An exemption is a debtor’s right to a minimum amount of property (usually in terms of dollars) that cannot be taken by creditors.

Important Note: A Homestead does not protect the homeowner against trust deeds, mechanics liens or prior to filing liens. The Declaration of Homestead form must be acknowledged and personally recorded to protect the resident.

Property Tax Problems

Property Tax Problems

Your Taxpayers’ Rights Advocate, The California State Board of Equalization wants to make the property tax system as equitable as possible. Consequently, they have appointed a Taxpayers’ Rights Advocate to help you with issues you cannot resolve at other levels.  You can contact the Advocate as follows:

Taxpayers’ Rights Advocate Office State Board of Equalization

450 N Street, MIC:70

P.O. Box 942879 Sacramento, CA 94279-0070

Phone:916-324-2798 Toll Free:888-324-2798 Fax:916-323-3319

Time is running out on the Federal Tax Credit

As you probably know, the Worker, Homeownership, and Business Assistance Act of 2009 extended the tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence and authorized a tax credit of up to $6,500 for qualified repeat home buyers.  But be ware, time is running out, under the new law an eligible taxpayer must buy or enter into a binding contract to buy a principal residence on or before April 30, 2010 and close escrow on the home no later than June 30, 2010.  For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.  The following is taken from IRS.gov: