Need help with Deed, Title and foreclosure - Posted by adriana

Posted by Craig (IL) on August 30, 2003 at 20:03:29:

A title is not a thing; it is a term and concept that serve to describe who owns property. When a person talks about ?taking title? they are talking about taking ownership with all the duties and rights of ownership. It is important to follow the passage of title from owner to owner, for any number or reasons: Even when selling a property (?passing title?), responsibility can remain with the seller (and all previous sellers) even after the sale. One you have title to a property, even when you sell it and title passes to your buyer, there could be conditions under which you may be still be held legally responsible. Converely, when you buy a property, you want to make sure that there is ?clear title? that is, when you take title there are no outstanding liens or other problems with the title that would negatively affect your ownership. This is why buyers usually get ?title insurance? To get a (virtual) guarantee that the title is clear of any such problems or the insurer will reimburse the buyer if any problems are found.

The deed, on the other hand, is a thing, a document that DESCRIBES of all the specific duties, and rights of ownership, the right to occupy, rent, mortgage, sell, etc. At a sale, the deed is a manner in which title is conveyed. It is important to learn about (or at least have your lawyer explain to you) what type of deed is being used, and what means, and important statements made in the deed. The deed is the instrument that should be recorded in government for all the world to see that ownership has been established.

To answer your question, understand that all loans relative to a property are actually a separate thing from ownership. Money is one thing, the dirt, rocks, and buildings within surveyed boundaries are another. When a borrower ?gives a mortgage? the buyer is agreeing that the lender can place lien against a property as insurance against the money he lends to the borrower. If you have ever bought property with a loan, you know that there are two documents: the ?note?, which describes all factors related to money and how it is to be paid back to the lender, and the ?mortgage?, which is the document that will be recorded in government as lien against the property. The mortgage gives the lender right to take possession of the property if the borrower doesn’t make good on the note.

Often different persons are identified on loan documents than on deeds (examples: there are legal rights granted spouses and people marry and divorce, in a divorce one spouse may relinquish (via a ?quit claim deed?) rights to a property and many other factors related to property ownership and financial matters). If a loan has gone bad for a lender that lender has right to foreclose on the property, that is, take title usually for purpose of selling to a third party to get his money back. There may be multiple owners, and there may be?and often are?other persons who will be affected by such an action. Other persons who have nothing to do with a bad note but with interest in the property who will lose their interest if a foreclosure proceeds. These persons may want to take steps to protect their interest.

There is much to learn about foreclosure before you venture into that market. Various laws apply depending on where you live. If you don’t know, for instance, that even if you buy a foreclosure, there are certian conditions where a former owner can take back title and leave you out in the cold. Secondly, there is a difference between first mortgages, second mortgages, and other factors—too much to eplain here. There are various books and courses on the subject, I suggest you find a book (a book for, say, ten bucks–rather than a “course” for hundreds or thousands of dollars_ that will explain the basics of this market. Study the book first, then, maybe buy a course if your still interested.

Need help with Deed, Title and foreclosure - Posted by adriana

Posted by adriana on August 30, 2003 at 16:56:55:

Hello all,

Can anyone help me to explain the difference between a deed and a title?

Also in case of two people being on the deed (or title) but only one person legally responsible of paying the loan and the property forcloses, who’s credit gets negatively affected? The payee’s or both?

Thank you all

Both… - Posted by JT-IN

Posted by JT-IN on August 30, 2003 at 23:06:48:


In the case of a Judicial Foreclosure, (one where a lawsuit is filed to foreclose the security interest of the mortgage), each and every party who has a bona fide interest in the property will be named in the lawsuit. This filing will show up in public record as a foreclosure suit and will negatively effect each party with an equitable interest.

The situation of two people being on the Deed but only one on the mortgage, usually only occurs when one party has sufficent qualifying income and the other does not. Usually only one party will sign only the Note (the one wiht qualifying income), but both will sign the Mortgage instrument, thereby consenting to the loan being placed against the collateral (house). You may have a different situation, but it is doubtful…

Unless the one party who is not technically responsible for the debt, can show that they were not a contributing factor to the foreclosure in anyway, then they will be negatively effected in the same manner as the primary borrower.

Just the way that I view things…