Legal Question in Real Estate Law in California

Re: 1st trust deed

The answer involves two additional pieces of information: (1) What kind of collateral would you like to have? and (2) What kind of collateral is your mother-in-law currently (after the fact) willing to give you?

Lenders usually demand their collateral in advance of shelling out the loan proceeds. There is no easy way to force a borrower to give collateral after the loan is made, especially if the loan agreement did not require the giving of collateral.

Did she give you a promissory note? Did the note mention any kind of collateral?

The ideal document for you to use is a deed of trust. Normally, a note and deed of trust are prepared to work together, and the promissory note says that it is secured by a deed of trust.

Depending upon the current status of paperwork supporting this pay-off and the cooperativeness of your mother-in-law, I can only suggest that you try to get her to execute a promissory note and deed of trust in your favor. I would further suggest that you deal with a title insurance company and use their forms, their technical assistance, their notary, and their recording service. They will sell you a lender's policy of title insurance in the process; it's worth it.

Finally, since I'm not privy to the full details of your pay-off and the terms of your agreement to do this for your mother-in-law, nor do I know if there is any deal documentation already in existence, I have to say that this is only general advice and there may be aspects of your deal that, if known to me, would suggest a different approach.