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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Re: The priority of simultaneously/concurrently recorded trust deeds – revisited and summarized Posted by DaveW in LA on December 14, 2007 at 12:56 AM In Reply to: Re: The priority of simultaneously/concurrently recorded trust deeds – revisited and summarized posted by Kristine-CA on December 14, 2007 at 9:47 AM Kristine, thank you for this very good and very productive suggestion, as well as for declaring your position on this topic. I took your suggestion and spoke today to a senior title officer of a well-known title insurance company. He also goes by instrument number -- that is, he considers a higher document number to be subordinate to the lower-numbered document unless there was something on the document to the contrary. Furthermore, he would issue title insurance on that basis, so we can agree that he's truly committed to this position. He also gave some insight to the situation where the loans get flip-flopped at the recorder (that is, the smaller "second" loan is recorded first and hence has the lower instrument number). He says if such an accident happens at the recorder, their practice is to have the documents either re-recorded (in the correct order) or to record a subsequent document (such as a subordination agreement) to correct this mistake. All of this said, I'm not very comfortable acting against Ward's opinion, so I'm looking forward to Ward's final verdict on this matter. DaveW : You say you have passed on properties at trustee sale over this issue? Would not a prelim title report and a 10 min consultation with a superivising title officer take care of this confusion? They see this all day long and can tell you what does and doesn't have priority. I'm in Rick's sequential doc number camp. The TDs are recorded by escrow in a certain order for a reason.....Kristine : : : Like many others, I have been curious about concurrent/simultaneously recorded trust deeds (same date and time, same lender, sequential document numbers), so I scanned the discussion history using words like simultaneous, concurrent and sequential. I found no less than seven separate discussion threads dating from Nov. 16 ’06 to Nov. 12 ’07. : : But I did not, to my dismay, find a conclusion. Instead I found a diversity of opinions, positions and research, as well as a comment from Ward on 8/19/07 that he was writing an article about the topic (which I hope will publish soon and resolve this for everyone interested). : : Here’s my summary of what’s been discussed to date. Ward has written and been quoted that concurrently recorded trust deeds (from the same lender) are of EQUAL priority unless stated otherwise explicitly on either trust deed. I’ll call this the “Presumed Equal Priority” position, and since this camp includes Ward, I have to assume that it’s the correct (and more conservative) position. And Lughead posted a nightmare scenario 5/31/07 which strongly suggested that an investor take this more conservative approach. : : The other position I’ll call the “Priority by Recording Number” camp – this group asserts that, unless stated otherwise, priority for concurrent and sequentially numbered TDs is established by the recorded document number. This camp includes Rick Harmon and “Buyer”, both of whom have posted intelligent and thoughtful comments. : : Clearly this is a big deal issue, and I've recently chosen to not bid on a couple of properties where the sequentially recorded TD did not explicitly state its lower priority (such as being stamped with this language: “This deed of trust is 2nd and subject and subordinated to a 1st deed of trust recording concurrently herewith”). This has meant that I’ve passed on a few properties that I really wanted otherwise (albeit, I really didn’t want them if they came along with another $50K to $250K in drag-along trust deed obligation). : : My question to add to this discussion forum relates to the heading/title of the ‘other’ trust deed. Can the name of the TD suffice to establish the lender's intent to subordinate? For example, oftentimes this smaller and sequentially recorded TD is a home equity line of credit (usually the TD form states on the footer “HELOC”). Is the explicit statement of the other loan being a HELOC satisfactory to establishing that it is lower priority? I’ve also seen a sequential TD where the title of the document is “Deed of Trust (Secondary Lien)”. This seems pretty explicit that the intent of this TD is to be of secondary priority, even though there was no explicit stamp or language that articulated that it was subordinate to a first deed of trust. : : Anyway, hopefully Ward will weigh in soon with the definitive and final word on this topic. Until this, I’m curious how others are dealing with this issue. Follow Ups: Shouldn't be a recording problem Tom 7:23 AM, 12/17/07 (0) Post a Followup: Name : E-Mail : Subject : Comments: : Kristine, thank you for this very good and very productive suggestion, as well as for declaring your position on this topic. I took your suggestion and spoke today to a senior title officer of a well-known title insurance company. He also goes by instrument number -- that is, he considers a higher document number to be subordinate to the lower-numbered document unless there was something on the document to the contrary. Furthermore, he would issue title insurance on that basis, so we can agree that he's truly committed to this position. He also gave some insight to the situation where the loans get flip-flopped at the recorder (that is, the smaller "second" loan is recorded first and hence has the lower instrument number). He says if such an accident happens at the recorder, their practice is to have the documents either re-recorded (in the correct order) or to record a subsequent document (such as a subordination agreement) to correct this mistake. : All of this said, I'm not very comfortable acting against Ward's opinion, so I'm looking forward to Ward's final verdict on this matter. DaveW : : You say you have passed on properties at trustee sale over this issue? Would not a prelim title report and a 10 min consultation with a superivising title officer take care of this confusion? They see this all day long and can tell you what does and doesn't have priority. I'm in Rick's sequential doc number camp. The TDs are recorded by escrow in a certain order for a reason.....Kristine : : : : : Like many others, I have been curious about concurrent/simultaneously recorded trust deeds (same date and time, same lender, sequential document numbers), so I scanned the discussion history using words like simultaneous, concurrent and sequential. I found no less than seven separate discussion threads dating from Nov. 16 ’06 to Nov. 12 ’07. : : : But I did not, to my dismay, find a conclusion. Instead I found a diversity of opinions, positions and research, as well as a comment from Ward on 8/19/07 that he was writing an article about the topic (which I hope will publish soon and resolve this for everyone interested). : : : Here’s my summary of what’s been discussed to date. Ward has written and been quoted that concurrently recorded trust deeds (from the same lender) are of EQUAL priority unless stated otherwise explicitly on either trust deed. I’ll call this the “Presumed Equal Priority” position, and since this camp includes Ward, I have to assume that it’s the correct (and more conservative) position. And Lughead posted a nightmare scenario 5/31/07 which strongly suggested that an investor take this more conservative approach. : : : The other position I’ll call the “Priority by Recording Number” camp – this group asserts that, unless stated otherwise, priority for concurrent and sequentially numbered TDs is established by the recorded document number. This camp includes Rick Harmon and “Buyer”, both of whom have posted intelligent and thoughtful comments. : : : Clearly this is a big deal issue, and I've recently chosen to not bid on a couple of properties where the sequentially recorded TD did not explicitly state its lower priority (such as being stamped with this language: “This deed of trust is 2nd and subject and subordinated to a 1st deed of trust recording concurrently herewith”). This has meant that I’ve passed on a few properties that I really wanted otherwise (albeit, I really didn’t want them if they came along with another $50K to $250K in drag-along trust deed obligation). : : : My question to add to this discussion forum relates to the heading/title of the ‘other’ trust deed. Can the name of the TD suffice to establish the lender's intent to subordinate? For example, oftentimes this smaller and sequentially recorded TD is a home equity line of credit (usually the TD form states on the footer “HELOC”). Is the explicit statement of the other loan being a HELOC satisfactory to establishing that it is lower priority? I’ve also seen a sequential TD where the title of the document is “Deed of Trust (Secondary Lien)”. This seems pretty explicit that the intent of this TD is to be of secondary priority, even though there was no explicit stamp or language that articulated that it was subordinate to a first deed of trust. : : : Anyway, hopefully Ward will weigh in soon with the definitive and final word on this topic. Until this, I’m curious how others are dealing with this issue. [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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