Lesson 3 Part 1 - Ways to Obtain Realty Flashcards
Ways to Obtain Realty….
1. Cash
Given Deed on closing - should always obtain CLTA
Ways to Obtain Realty
2. Mortgage
Non-negotiable security instrument on realty
Lien Theory
- Used in MidWest, East and Southern states
- Law considers that a mortgage creates a lien against real property pledged in the mortgage to secure payment of a debt
Note
- Negotiable instrument on realty
- Typically FHA, VA or CONV conforming or non- conforming loans
Mortgagor
- Becomes borrower/payer, the one getting a loan on their realty from a lender
Mortgagee
Becomes payee, the one giving a loan on the borrowers realty
Mortgage Clauses -
Acceleration
In the even of realty default, whole amount of principal and interested may be declared due and payable.
Mortgage Clauses -
Alienation
- Balance of realty debt becomes immediately due and payable if property is sold of transferred
Mortgage Clauses -
Foreclosure
“Legal” procedure whereby realty used as security for debt is sold to satisfy debt.
Mortgage Clauses -
Prepayment
Terms upon which mortgagor may pay entire or stated amount of mortgage principal at some time prior to due date with or without penalty.
Mortgage Clauses -
Insurance
Indemnification on your realty against loss from a specific hazard or peril
Mortgage Clauses -
Impound
Establishing an account for purpose of paying annual tax and insurance bills.
Mortgage Clauses -
Defeasance Clause
States when payments are completed, mortgagee removes lien bt a satisfaction piece.
Mortgage Clauses -
Foreclosure (Court Action)
Allows the mortgagee to foreclose with a sheriff’s deed.
Mortgage Clauses -
Equitable Right of Redemption
A definite period in which mortgagor can make up late payments on their realty.
Mortgage Clauses -
Statutory Redemption Period
Original mortgagor may reclaim realty if full back payments are made within so many days after foreclosure( differs by state)
Deed of Trust / Trust Deed
Security instrument on realty
Title Theory
- Used in Far West States
- Law considers that a trust deed conveys title of realty to a trustee until the note is paid off
Trustor
Becomes “borrower and payer”, the one getting the loan on realty
Beneficiary
Becomes “payee”, the one giving a loan on realty
Trustee
Impartial holder of title on a trust deed (title only)
Trustee’s Deed
A deed issued after a foreclosure
Deed of Reconveyance
- A deed issued by the trustee
- States loan is paid in full
- Gives all rights and privileges back to trustor
Equitable Right of Redemption
Period in which trustor can make up late payments on note
Acceleration
- Default
- In the event of default, whole amount of principal and interest may be declared to be due and payable at once
Alienation
- Due on Sale
- Balance of debt becomes immediately due and payable if property is sold without permission of the note holder.
Foreclosure
- Non judicial
- Legal procedure whereby property used as security for debt, is sold to satisfy debt in the event of default
Prepayment
- Terms upon which mortgagor may pay entire or stated amount of mortgage principal at some time prior to due date.
Insurance
- Indemnification against loss from specific hazard or peril
Impound
Establishing account for purpose of paying annual tax and insurance bills without having to come up with lump sum.
Vendor / OWC
- Seller finance
- Real Estate purchased without a lender originated loan or cash
- Terms synonymous and are the security instrument
- Land Contract, Installment Contract, Contract for Deed
OWC - Note or PMA
- Purchase Money Agreement
- Negotiable instrument on realty
- Owner carries loan, no lender
Vendor
- MUST be the seller
* * Retains Legal Title only
Vendee
- MUST be the buyer
* ** Has Equitable Title and the bundle of rights
Defeasance Clause in a PMA
- Notification clause in PMA
- States when payments are completed, vendor removes lien
- Removed by a satisfaction piece
- If vendee defaults, vendor asks for foreclosure through court
Devise
- Giving of realty in valid will
Devisor
- Died with will
- The deceased person giving realty in a vaild will
