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
Better Homes and Gardens Real Estate | Haven Properties
San Luis Obispo Office:
441 Marsh Street
San Luis Obispo, CA 93401
Morro Bay Office:
805 Main Street
Morro Bay, CA 93442
CA DRE# 01935192
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*
Home | Office Listings | Open Houses | Search for Homes | Advanced Search | Map Search | Newly Listed in the San Luis Obispo Area | San Luis Obispo | Arroyo Grande | Atascadero | Morro Bay | Nipomo | Paso Robles | Avila Beach | Commercial Search | Foreclosures, REO, Bank owned, Short Sales | San Luis Obispo Lots and Land | Commercial Real Estate - City | Trilogy, Monarch Dunes Golf Resort Homes in Nipomo | Cypress Ridge Golf Course Homes - Arroyo Grande | Foreclosure Search | Avila Beach Mobile Homes | San Luis Obispo Country Club Estates - Homes For Sale | Pelican Point Avila Beach | The Villas - Avila Beach | Bassi Ranch - Avila Beach Homes for sale | Mortgage Rates | Buyer/Seller Info | Our Blog | Real Estate News!!! | Local Resources | Weather | Relocation | San Luis Obispo, the Happiest Place to Live! | Real Estate Terms | School Information | Contact Us | San Luis Obispo Housing, Homes for sale in San Luis Obispo | Real Estate in San Luis Obispo, CA, agent, broker | real estate in San Luis Obispo, Country Club Estates, Luxury | Pismo Beach and San Luis Obispo, CA homes for sale | Office Listings -... | King Fisher - Avila Beach | Pismo Beach Homes only | Pismo Beach Mobile Homes | Pismo Beach - Condos | Pismo Beach - Ocean View Homes | Indian Hill Mobil... A Bit More About Us | | Commercial County Search | Our Agents | Gated Communities | SLO County Vineyards and Wineries | SLO Community Sea... | Ocean View Homes | San Luis Obispo Golf Courses and Homes for sale | Community Searches
© 2019 A Payne International Corporation. All rights reserved.
Better Homes and Gardens® and the Better Homes and Gardens Real Estate Logo are registered service marks owned by Meredith Corporation and licensed to Better Homes and Gardens Real Estate LLC. A Payne International Corporation fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. Each franchise is independently owned and operated. Any services or products provided by independently owned and operated franchisees are not provided by, affiliated with or related to Better Homes and Gardens Real Estate LLC nor any of its affiliated companies.
Based on information from California Regional Multiple Listing Service, Inc. as of 2019-08-19. This information is for your personal, non-commercial use and may not be used for any purpose other than to identify prospective properties you may be interested in purchasing. Display of MLS data is usually deemed reliable but is NOT guaranteed accurate by the MLS. Buyers are responsible for verifying the accuracy of all information and should investigate the data themselves or retain appropriate professionals. Information from sources other than the Listing Agent may have been included in the MLS data. Unless otherwise specified in writing, Broker/Agent has not and will not verify any information obtained from other sources. The Broker/Agent providing the information contained herein may or may not have been the Listing and/or Selling Agent.