Seller Carry Back Trust Deeds
Seller carry back trust deeds are used when property owners provide financing to sellers. Also known as seller carry back financing, trust deeds secure the property until private financing has been repaid. Sellers can elect to carry all or a portion of real estate financing. This technique is often used when buyers are unable to obtain financing through a traditional lending source.
Three parties are involved when seller carry back trust deeds are used. These include the Trustor, Beneficiary and Trustee. The property owner or seller is referred to as the Trustor. The individual or entity that receives income from the mortgage note is referred to as the Beneficiary. Beneficiaries can be a private party or a lending institution such as a bank or credit union. The person who holds legal title to the real estate is referred to as the Trustee. Depending on the circumstances, the Trustor can also be the Trustee and Beneficiary.
Seller carry back trust deeds are secured with a promissory note. The Beneficiary is responsible for managing the trust to ensure the borrower remains current with mortgage payment obligations. If the borrower defaults on the promissory note, the beneficiary can commence with foreclosure action.
When seller carry back trust deeds are used for private real estate financing, the deed must be recorded through the court to show there is a lien against the property. Trust deeds are used in lieu of a home mortgage loan. The Trustor uses the property as collateral against the deed. When the loan is paid in full the Trustor transfers legal title to the borrower.
Seller carry back financing is usually reserved for sellers who own the property outright. If the property owner holds a mortgage, they generally do not want to engage in private financing because they place the property at risk for foreclosure if the borrower defaults on the agreement.
Property owners who hold seller carry back trust deeds can sell the note to another buyer. Selling the deed does not alter the terms of agreement between the Trustor and borrower. However, the borrower must be notified of the deed transfer.
If you own seller carry back trust deeds and desire to sell the notes for lump sum cash, I might be interested in buying your real estate notes. I encourage you to submit information about your trust deeds via the "we buy houses" form. I will personally contact you to further discuss available options and to determine if selling the trust deed is your best option.
If you would like to learn more about seller carry back financing or other types of financing options, feel free to peruse our real estate investing article library. New articles are added each week, so take a moment to subscribe to our mailing list. Subscribers receive notification via email when new articles are published, helping them stay abreast of current market trends.
Published on October 21, 2009 at 01:16 AM