Posted by Stacy (AZ) on May 20, 1999 at 23:14:51:
After reading the AZ statutes for an hour trying to understand the legalese, I decided to just look up the definition of Trust Deed after I posted. Of course, it’s the trustee who holds title in a trust deed. (Dang, I knew that!) The term “naked title” is new to me.
What confuses me is, who holds legal title? I know the trustor holds equitable title. Is there no legal title involved in a trust deed? I should have gone to law school…
Stacy
Question about assignment of deed. - Posted by Michael Murray
Posted by Michael Murray on May 20, 1999 at 18:54:17:
I posted this down the page as a reply to another post, but would really like some input from anyone else who feels so inclined.
I have seen various posts regarding having the seller deed the property over to someone else. The deed to my house is held by the bank. Isn’t that the typical condition? How does
the seller sign it over if it is not in their possession? Can this be done with a side instrument? How is it recorded?
Thanks,
Michael Murray
Re: Question about assignment of deed. - Posted by JPiper
Posted by JPiper on May 20, 1999 at 22:28:55:
The deed to your house is NOT held by the bank. The bank holds a note and mortgage in a mortgage state. In a deed of trust state, the bank holds a note, and a trustee holds “bare title” (title without the right of possession) as security for the loan (the deed of trust). This is not like a car loan where the bank hold title.
The seller can transfer the property by signing any of the common types of deeds which would then transfer the ownership of the property along with any lien attached to the property.
JPiper
Re: Question about assignment of deed. - Posted by Stacy (AZ)
Posted by Stacy (AZ) on May 20, 1999 at 20:46:51:
I think this is only possible in mortgage states, and not trust deed states, because a mortgage is a lien on the property, but a trust deed conveys legal title to the beneficiary (bank) until the note is satisfied. After satisfaction, a release of deed of trust is issued, which conveys title to the trustor (borrower). I’ve posted the question on Bronchick’s site…let’s see if he can clarify.
Stacy
Re: Question about assignment of deed. - Posted by Dan
Posted by Dan on May 21, 1999 at 03:50:29:
So does that effectively transfer liability for the note (and mortgage in mortgage states) to the buyer so that the seller could get a loan for a new house and not show the old note on a credit report. Sorry if this is a dumb question, I am still learing and that has been a question I had and hadn’t found an answer for. Thanks
Re: Question about assignment of deed. - Posted by JPiper
Posted by JPiper on May 20, 1999 at 22:43:27:
A deed of trust does not convey “legal” title to the “bank”. A deed of trust conveys “naked title” (title without the right of possession) to a trustee (not the bank) who then holds title as security for the loan and for the benefit of the lender (the beneficiary). The lender is the owner and holder of the note. The deed of trust defines the actions which the trustee may take if the borrower defaults on any of the terms of the deed of trust. A deed of trust is a security instrument.
A seller signing a deed will convey ownership of the property in either a mortgage or deed of trust state.
JPiper
P.S. Let me know if Bronchick says I’m wrong.
Re: Question about assignment of deed. - Posted by Stacy (AZ)
Posted by Stacy (AZ) on May 21, 1999 at 10:43:41:
Nope. The borrower is on the note just the same as if title didn’t transfer. The note stays on his credit report. But, he may be able to compensate 75% of this monthly payment as “rent”, depending on the what the new lender allows.
Stacy