Get A Home Get A Special Deed

When you buy property at auction in a state that has redemption laws, you get a special deed or special title. Because the owner has a number of months in which they can repay the purchase price and redeem their property, it’s called a defeasible title. That is, one that can be defeated, which means that you don’t have clear title yet.

Redemption Rights: If you buy the redemption rights from the owner at the time of the auction, you will own the title and the rights and therefore be able to get clear title. A redemption purchase should also be notarized. You should consult a local attorney, because each state differs in the way in which this should be handled.

Whenever you make a purchase such as this, you can always buy the redemption rights from the owner -making the title you hold clear, or in simpler terms: permanent. It’s always a good idea to consult your real estate lawyer with regards to handling this type of case as the laws differ from state to state. If you’re not careful, you can and will get screwed over.

Purchasing Property

The process of purchasing property usually starts with a loan. If you borrow $100,000 from a lender, that is a note. When you buy a piece of property, to make the property the collateral for that note, you get a mortgage or deed of trust. In a judicial state, it will typically be a mortgage. If the owner defaults on the note, the lender must take the owner to court to sue for payment. The mortgage attached to the note is the security instrument. If the owner does not pay, the property can be foreclosed.

Relationship of Notes to Mortgages and Deeds of Trust

3 parties are always involved in a deed of trust sale:

Trustor = Borrower

Beneficiary = Person lending the money (mortgagee)

Trustee: Whoever is handling the transaction

These two are separate and different documents, yet serve a single purpose: ensuring that the loan is paid in full, and should the Trustor fail to do so, securing the perused property as collateral.

There are two major strategies in the foreclosure business:

Short Sale

Equity Split

There may also be another option, a “subject to” transaction for more expensive properties.