Legal Question in Real Estate Law in California

Re: Loan collateral?

You should use a Note and a Deed of Trust secruing the note. You also should obtain a property title report to verify you have enough security.

Re: Loan collateral?

In California you need a promissory note secured by a deed of trust. You can get a preprinted form deed of trust from any title company. Once you get the note and the deed of trust, you record the deed of trust in the official records (the recorder's office) in the county in which the property is located. Be sure you get either a lender's policy or have someone check to make sure that there are no other liens or encumbrances or your T.D. could be valueless.

Bob

www.beauchampfirm.com

Re: Loan collateral?

You should probably get a deed of trust on the property.

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Re: Loan collateral?

You should have a deed of trust prepared for the loan, and have that signed and notarized and recorded. Also, get a title/lien search done on the property to make sure there's equity, as your lien will be behind any others already on the property.

Re: Loan collateral?

Although it would cost you a small fee, a safer way to do this transaction is to run it through an escrow at a local title or escrow company. Simply go in and explain what you want to do to an escrow officer. Deposit the money you're going to lend into escrow and have a title check done on the collateral property to see whether the equity is sufficient. (You may also want an appraisal unless you're confident of the market value of the collateral). Get title insurance and instruct the escow holder not to release the money to the borrower until the insurance is in place and the deed of trust has been recorded.

This is routine stuff for escrow companies and they will give you the forms and assistance you need. You still need to exercise discretion on the adequacy of the collateral (market value and equity giving account to prior liens).