RE Law MT 2

• utility
• scarcity
• demand
• transferability

value based on the sales an purchases of similar properties

value based on how much it would cost to build a comparable property

value based on how much income can be generated from the property

• trainnee
• licensed residential
• certified residential
• certified general

• 1. Promissory Note: contract to repay the money borrowed
• 2. Mortage: Real property is hypothecated as collateral to promissory note

When lener charges in excess of a state's maximum interest rate

higher of 10% or 5% over CA Fed Reserve

1.

• 1. Mortgage does not ransfer title to lender
• 2. Lender has lien on property
• 3. Lender must foreclose to take possesion

• 1. Mortgage TRANSFERS TITLE from borrower to lender
• 2. Lender retains title for duration of mortgage

borrower has right of posseion until default

• 1. Apply for loan
• 2. gather necessary docs
• 3. underwriting
• 4. approval/enial
• 5. Lender may sell loan on 2nd market

Gov. guarantees loan balance in event of default

Seller keeps existing mortgage on property and extends to the buyer a junior mortgage that wraps around an dexists in addition to senior

Borrower takes out two motgages for the same property

borrower pays interest only for set period

then payment amount increase to reduce principle

Seller has orginal loan w/lender

Seller creates junior loan w/ buyer

Buyer purchases home, subject to existing mortgage

• 1. buyer takes title
• 2. seller liable for payment
• 3. Lender can only enforce payment aginst the seller

• 1. Buyer assumes the seller mortgage
• 2. Buyer and Seller BOTH liable for debt
• 3. Seller can avoid liability by having lender release them

Benefiricary (lener)  Trustor (borrower)  Trustee (financial Institution)

1. Requires Disclosures to consumer about terms and costs of loans

Broker and lenders and brokers are subject to it

Not apply to: business transaction, ag, organizational credit transactions, commercial transactions

• 1. APR
• 2. Finance charge
• 3. Amount financed
• 4. Payment terms
• 5. Right of rescission (right to cancel second mort. or home equity line within 3 days of closing) (Does NOT apply to first mortgage)

Borrower has 3 yr right of recession on ALL mortgage types

• 1. amount or number of monthly payment
• 2. amount of down payment
• 3. length of loan
• 4. finance chargers

Must disclose amount for all trigger terms and the APR

• 1. Seller provides financing to buyer
• 2. Seller retains title unitl debt is paid

• 1. in Writing
• 2.Grantor/grantee clearly identifed
• 3. granot w/ legal capacity
• 4. property described
• 5. express intent to immediately covey interest to grantee
• 6. type of interest and rights given to grantee
• 7. acknowledgement
• 8. delievery and acceptance

• proper spelling required
• list aliases

•  percentages of ownership must be listed
• give status of grantee (married,unmarried)

• 1. Legal significance of deed conveyance
• 2. to whom property is conveyed
• 3. nature and value of property

* Grantee does not have to have legal capacity

• date
• name of notary
• person signin is same as identified in deed

Delivering grant through escrow

Grantee releases all control of deed

Grantor intends to relinquish al control of deed

• 1. actual delivery
• 2. Deed acknowledged by grantor before a notary
• 3. Deed is recorded

Grantor provides 6 warranties to grantee

• 3 present:
• seisin
• right to convey
• free from encumbrances

• 3 future:
• covenant of warranty
• quiet enjoyment
• further assurances

Same warranties as Warranty Deed except

Warranties are limited to only the period of time grantor owned the property

Has implied warranties:

Granto has not previously conveyed property to someone other than grantee

Property is free of undisclosed encumbrances made by GRANTOR

Grantor IMPLIES that he has title to property

Grantor make no other covenant to granteee

• 1. No warranties about tie
• 2. Convey any rights grantor MAY HAVE
• 3. no promoise of ACUTAL right or interest

• 1. states with power title insurance companies
• 2. gifting real property
• 3. resolve questional title

Judicial: result of the court ; NO warranties

Trustee: result of foreclosing: Few, if any, warranties

• 1. pure race
• 2. notice
• 3. race.notice

First to record take title

LAST BFP (Purchaser w/o notice) purchaser keeps title

FIRST BFP that RECORDS (CA uses such system)

Title free form any liens or encumbrances (except ones buyer is aware of and accepts)

closing

• 1. Abstract of title w/ attorney's opinion
• 2. purchase title insurance
• 3. Torrens system for title registration

• 1. opinon tracing chaing of title
• NOT a guarantee but an opinon

Protects only insured buyer name in policy for defects AT TIME of CLOSING

Subsequent purchasers are not given protection

Created Form most widely used by insurers

• Protects Against:
• 1. title held by another perons
• 2. encumbrances
• 3. unmarketable
• 4. no right of access to property (ex. landlocked)

• 1. boundary disputes
• 2. nonrecorded easements
• 3. zoning restrictions

Use certification and deed to identify ownership

in Person

• escrow (Western states and commercial transaction)
• Escrow agent hold documents in trust unitl conditions are met

1. Consumer info about costs of mortgage and closing

2. Applies to:

mortgage loans on 1-4 unit residential property (1st and 2nd mort., refinance, lines of credit) 

• 3. Does not apply to :
• business, commercial loans, or construction loans

1. Special Info Bookelet within 3 days of loan application

2. Good FAith Estimate: summary of chares expected as closing  (tolerance percentages that final costs can not exceed GFE)

3. Whether it intends to service, assign, sell or transfer the loan

4. HUD 1 statement:  Final summary of costs


5. Escrow Statement: est. taxes, insruace, oand other charges incurred in first 12 months of loan

• 1. Kickbacks of any type
• 2. referals by someonw who owns a 1 percent or greater interest in company unless disclosed that:
• referral has such interest
• est. of charges
• use of that provider is not mandatory
• 3. Cannot require the use of specific title company