legal documentation contracts four essential elements: –parties to a contract must be legally...

Legal Documentation

CONTRACTS

• FOUR ESSENTIAL ELEMENTS:– PARTIES TO A CONTRACT MUST BE

LEGALLY COMPETENT– SUBJECT MATTER MUST BE LEGAL

AND PROPER– MUST BE EVIDENCE OF AN OFFER

AND AN ACCEPTANCE– MUST BE CONSIDERATION

REAL PROPERTY

• THE DEED OF TRUST IS THE INSTRUMENT USED TO ESTABLISH A SECURITY INTEREST IN REAL PROPERTY

• IT IS A THREE PARTY INSTRUMENT– LENDER– BORROWER– TRUSTEE

WARRANTY DEED

• THE INSTRUMENT THAT TRANSFERS TITLE IN REAL PROPERTY

• THE SELLER IS GUARANTEEING THAT THE TITLE IS FREE AND CLEAR OF ENCUMBRANCES

QUITCLAIM DEED

• THE SELLER IS AGREEING ONLY TO CONVEY ANY INTEREST IN THE PROPERTY, BUT NOT GUARANTEEING THAT THE PROPERTY IS FREE OF ENCUMBRANCES BY OTHERS

OTHER INSTRUMENTS

• ABSTRACT - ALL DEEDS, MORTGAGES, FORECLOSURES, AND OTHER PERTINENT FACTS THAT AFFECT TITLE TO LAND.

• TITLE INSURANCE - USED IN PLACE OF AN ABSTRACT.

• A LIEN IS A CLAIM OR ENCUMBRANCE ON A PROPERTY.

• FORECLOSURE IS THE PROCESS UNDER WHICH LENDERS EXERCISE THEIR RIGHTS TO HAVE SECURITY SOLD AND THE PROCEEDS APPLIED TO THE OUTSTANDING LOAN BALANCE.