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Re: Looking out for partial interests.

Posted by Ward-CA- on September 25, 2001 at 11:09 AM

In Reply to: Confused, Again? posted by Jason on September 25, 2001 at 9:22 AM

: Great seminar the other night in Hunington. I have a question about a topic you touched on. I have found 3 people on a Deed of a property with a 1st of $65K remaining and is in default. There is a 2nd going to Trustee sale but only 1 of the indivduals is on the 2nd Deed of Trust for $80. If I go to auction and buy the 2nd do I only get the 1 individuals interest in the property, leaving me paying $80K for only a part of the home? You touched on this issue in Hunington about making sure everyone has signed the Deed of Trust.

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Jason, a trust deed is a voluntary lien. Thus, for it to be effective against an owner’s title, a trust deed would require the owner’s signature. If three people own a property and only one signs a deed of trust against the property, then only the signer’s interest is burdened by the trust deed. Consequently the foreclosure of such a trust deed will only transfer a partial interest in the property to the new owner-by-foreclosure.

Most people don’t want to own a portion of a property, with two complete strangers owning the balance of the undivided interest thereto. So the re-sale of such property would be fairly difficult without giving some buyer a huge discount.

Usually such situations are the consequence of executing a trust deed without the oversight and involvement of escrow and title insurance.

This issue was brought up as an example of how easy it is for an amateur to overlook a routine step in the title research activity and get badly bitten as a consequence.


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