As a San Diego Trust Lawyer, I often encounter questions about different types of property documents. Two that frequently come up are documents for transferring property ownership and those used in lending situations. Let’s explore these important legal instruments and how they might impact your property rights.
Ownership Transfer Documents
Documents like Grant Deeds or Quitclaim Deeds are commonly used to transfer ownership of real property from one party (the grantor) to another (the grantee). When you use a Grant Deed instead of a Quitclaim Deed, you’re typically making certain guarantees about the property’s ownership status and any existing encumbrances. By contrast, a Quitclaim Deed merely transfers whatever interest you may have in the property without promising that you have an interest
These types of deeds are often used in property sales, transfers to trusts, transfers to business entities, or when gifting property to family members. As your Trust Lawyer, I can help ensure your property transfer documents are properly prepared and recorded to protect your interests.
Lending Security Documents
In lending situations within California, Deeds of Trust are usually used. These typically involve:
- The Borrower
- The Lender
- A neutral third party
When you take out a loan secured by property, you’ll likely sign a promissory note and a trust deed. In the promissory note the borrower will agree to the loan’s terms. The trust deed, which is mentioned in the promissory note, is said to ‘secure’ the promissory note. It gives the lender a security interest in your property. If you default on the loan, the lender acting together with the third party referred to as a Trustee is able to foreclose on the property. California procedures for this are different from those of many other states and ordinarily does not require court involvement.
Key Differences
1. Purpose:
- Ownership Transfer Documents: Transfer property ownership
- Lending Security Documents: Secure a loan with property as collateral
2. Parties Involved:
- Ownership Transfer Documents: Typically two (grantor and grantee)
- Lending Security Documents: In California, usually three (Borrower, Lender, Trustee)
3. Legal Effect:
- Ownership Transfer Documents: Usually transfer title immediately
- Lending Security Documents: Typically place the property under a set of terms and conditions which if violate allows the lender to trigger a process allowing the sale of the property to create the liquidity necessary to payoff the loan.
4. Foreclosure Process:
- Ownership Transfer Documents: Not applicable
- Foreclosure: In California powers given in the loan security documents (“the Trust Deed”) allow the third party (usually called a ‘Trustee’) to go through a set of steps and ultimately sell the encumbered property without court involvement. The proceeds from the sale are used to satisfy the loan amount and reimburse the lender for the costs of the foreclosure process. Any excess is supposed to be paid to the borrower
Why This Matters
Understanding the difference between these documents is crucial for protecting your property rights. Whether you’re buying, selling, or refinancing a home, knowing which document is being used can help you understand your obligations.
As your Trust Lawyer, I can guide you through the intricacies of these legal documents. We can ensure that your property transfers are done correctly and that you fully understand any loans secured by your property.
Getting Help
Navigating the world of property documents can be complex. Don’t leave your property rights to chance. Contact our office today at 619-281-1888 to schedule a consultation with an experienced San Diego Trust Lawyer. We’ll help you understand your property documents and ensure your interests are protected. Your peace of mind is just a phone call away.