Here you go … - Posted by Jack Compton
Posted by Jack Compton on November 14, 2000 at 24:04:11:
Kevin, unless you enter a Contract For Deed, the seller that carries back a mortgage (financing the deal) you become the Equity Owner. This simply means you have an equitable interest in the property you’ve bought. In effect, you are the new owner, and the LEIN HOLDER (the previous owner carrying the mortgage) is holding legal title to the property as collateral. You can compare it to a new car purchase. The bank holds lein on the title until you pay off the car loan. This is the same concept, only in the case of pledged property, it is mortgaged as security; but you become the legal owner as far as being able to re-sell, take tax write offs, pay taxes, insurance, etc.
If you look at the Deed of Trust, it’s a loan instrument used in some states in lieu of a mortgage. But it means the same thing. And when you pay off your property you will receive a DEED, which is simply a piece of paper that (when filed) evidences your ownership or title to your property. When this happens, you then hold clear legal title to it. So keep in mind that “Deed of Trust” and mortgages in general are loan instruments that provide equitable ownership, but not “True Ownership” until all leins are payed off. —Jack