Top 5 Things to Consider with Regarding Deed of Trust
Considering Deeds of Trust: A Guide for Residents Everywhere3 min read
No matter your state of residence, when it comes to the execution of a deed of trust to secure a loan, there are certain considerations that must be weighed. For businesses and individuals in Chicago and the surrounding areas in particular, a knowledgeable and experienced team of local attorneys should be consulted to help you make an informed decision and ensure that all of the paperwork is correctly completed. In this article, we discuss the top 5 things you need to consider with regards to a deed of trust.
What is a Deed of Trust?
A deed of trust is a legal document commonly used as an alternative to a mortgage. It conveys title to a trustee who holds the deed until the borrower pays off the loan. The deed of trust must be signed by the borrower, the lender, and, in some cases, the beneficiary. Though there are some minor differences in terminology, the primary purpose of this security instrument is the same: to secure repayment of the loan.
Why Should Businesses in Chicago Consider a Deed of Trust?
Businesses, individuals and lenders in Chicago may choose to use a deed of trust instead of a mortgage to secure the repayment of a debt. Unlike a mortgage, it is not necessary in most cases to record a deed of trust with the county. This means fewer fees and a faster approval process. Moreover, the trustee can act more quickly than the court in enforcing the deed’s terms and taking possession of, and selling, the property should the borrower breach the terms of the deed.
5 Things to Consider When Crafting a Deed of Trust
When considering a deed of trust to secure the repayment of a loan, there are five key elements that must be addressed:
1. What Property is Being Used to Secure the Loan?
The deed of trust must specify the legal description of the property used to secure the loan. Potentially, this could extend to real estate, personal property, or both. In addition, any transfer of liens must be indicated.
2. How are Loan Payments to be Calculated and Paid?
The deed of trust must spell out when payments are due and in what amounts, as well as the method these payments are to be made. This should include details such as whether any prepayment penalties apply and the level of interest applicable.
3. What if Monthly Payments are Missed?
The deed of trust must clearly outline what happens if the borrower is unable to make his or her monthly payments. Generally, this should include details on what happens with any unpaid fees, taxes, and assessments collected by the lender. It should also specify the process for initiating foreclosure proceedings in the event of non-payment.
4. Who Can Originate the Deed of Trust?
The deed of trust must be originated by a qualified person or entity, such as a title company, an attorney, or a party in the transaction (such as a real estate broker). It must be recorded prior to the closing of the loan and typically entails a fee.
5. What Legal Rights Does the Lender Have?
The deed of trust must specify the borrower’s rights, as well as the lender’s, including such matters as the lender’s right to force the sale of the property should the loan default, and any other material facts associated with the loan.
Tips for Hiring the Right Attorney for Your Deed of Trust Needs
To ensure a successful transaction, it is important to hire experienced attorneys who understand local regulations in Chicago and its surrounding areas. A good lawyer should be able to advise regarding the key terms of any loan agreement and can explain the specific regulations applicable to deeds of trust.
Also, be sure to ask your chosen lawyer about any flat rate or retainer fees that may be applicable. In addition, make sure to define timelines for performing tasks and know who is responsible for overseeing each stage.
When crafting a deed of trust, there are certain considerations that must be taken into account. These include an understanding of the rules regarding liens, payment of taxes and assessments, initiation of foreclosure proceedings and more. Furthermore, it is important to hire an attorney who is knowledgeable about local laws pertaining to such matters. By taking these steps, businesses and individuals in Chicago and the surrounding areas can rest assured that their deed of trust is secure.