Malik W. Ahmad

Definition and Terms Highly Used


ADJUDICATION
A judicial determination

BANKRUPTCYA proceeding in U.S. District Court wherein debtors who can not meet the claims of their creditors may be adjudged bankrupt by the court. There are three different types of bankruptcy proceedings.

BENEFICIARY (“Bene”)
One for whose benefit a trust is created; a lender secured by a deed of trust.

BID
Trustee’s sales are conducted by verbal bid, with the auctioneer starting off with a minimum bid provided by the trustee (total of all monies due the beneficiary) on behalf of the beneficiary and then opening up the bidding to qualified bidders.

BONA FIDE PURCHASER
A buyer in good faith, for fair value and without notice of any off-record adverse claim or right of third parties, and who consequently, takes title free of such defects.

BUSINESS DAY
Any day except Sunday or the following business holidays, New Years Day, Washington’s Birthday, Cesar Chavez Day (California Only), Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving, and Christmas.

CASHIER’S CHECK
A check drawn on the issuing bank’s funds and guaranteed payable (except in instances where it is lost or stolen).

CHAPTER 7
“Debtor Wipeout, Chapter 11 – This is a business reorganization proceeding, Chapter 13 – “Debtor Workout”.

CONSTRUCTIVE NOTICE
Notice imparted by the public records (e.g. the county recorder’s records). The law presumes that one has knowledge of instruments that are properly recorded.

CREDIT BID
The opening bid at a trustee’s sale is made on behalf of the foreclosing beneficiary. If it is less than or equal to the total amount of money owed to the beneficiary it will be made on a credit basis. But once the bid surpasses the total payoff amount then the beneficiary must begin to bid with cash at hand, just like all other bidders.

DATE-DOWN
Indicates the date a document was executed (signed), rather than the date of recording (recording date).

DECLARATION
A non-notarized statement made under of penalty of perjury.

DECREE
A judgment by court.

DEED OF TRUST (TRUST DEED)
A three party security instrument conveying the legal title to real property as security for the repayment of a loan. The owner is called the “trustor”. The neutral third party to whom the bare legal title is conveyed (and who is called on to liquidate the property if need be) is the “trustee”. The lender is the “beneficiary”. When the loan is paid off the trustee is directed by the beneficiary to issue a deed of reconveyance to the trustor, which extinguishes the trust deed lien.

DEFAULT

Failure to make the loan payments as agreed in the promissory note.

DOCUMENTARY TRANSFER TAX
A local tax levied on recorded transfers of title to real property. Our local (Southern California) tax rate is $.55 cents per $500 (or fraction thereof) of owner’s equity transferred. The tax declaration is generally found on the face of the deed.

EASEMENT

A right of way allowing someone to cross over another’s property for a limited, specific purpose. A typical example is an easement granted to a utility company.

ENCUMBRANCE

Is the legal right, claim or lien upon real property that diminishes the owner’s equity or the land’s value. Typical encumbrances are trust deeds, judgments, assessments, mechanic’s liens, (Covenants, Conditions, and Restrictions) C C & R’s, (easements, etc.

FORBEARANCE AGREEMENT
A formal agreement between a borrower and a lender to temporarily postpone an on-going foreclosure.

FORECLOSURE
The forced sale of property pledged as security for a debt that went into default.

“FORTY THIEVES”

The local group of professional foreclosure speculators working in concert at the trustee’s sales rather than in direct competition. Their orchestrated, sideline bidding activity acts to keep bidding levels down, resulting in reduced over-bids going to junior interest holders.

INSTITUTIONAL LENDERS
Banks, savings & loan associations, and insurance companies who lend out depositors’ money as contrasted with private individuals lending out personal funds.

JUDICIAL FORECLOSURE
This is a foreclosure that’s processed via a court action. Usually limited to a collection action on an involuntary, judgment lien that automatically attached against a debtor’s real property by operation of law (such as a recorded abstract of judgment).

JUNIOR LIEN
A lien that does not have first claim on the property it is secured by because it was recorded later than a competing lien secured by the same property.

LEGAL DESCRIPTION
A formal description of real property sufficient to locate it by reference to government surveys or approved recorded maps. There are five common forms of legal descriptions: 1) Lot, Block & Subdivision; 2) Metes & Bounds; 3) Sectionalized; 4) Ranchos; and 5) Condominiums.

MORTGAGE
Is a written pledge of property that is put up as security for the repayment of a loan. The lender is the mortgagee and the property owner is the mortgagor.

NOTICE OF DEFAULT
This is the first phase of the foreclosure process in California. The notice, which is prepared and recorded by the foreclosing trustee, contains particulars regarding the default in payment, the affected deed of trust, etc. The default period runs a minimum of 90 days.

NOTICE OF TRUSTEE’S SALE

The preparation of the Notice begins the second phase of the foreclosure process in California. The notice is prepared and recorded by the foreclosing trustee. It recites the legal description of the property being foreclosed upon and gives the date, time and place of the pending trustee’s sale. The publication phase in California begins at minimum 20 days prior to the scheduled sale.

PARCEL Any area of land contained within a single description.

PERSONAL PROPERTY

This is property that is movable or harvestable, i.e. securities, furniture, cars, promissory notes, clothing, intangibles, etc.

POSTING
This is providing notice by physically attaching it to a prescribed post, wall, or bulletin board and/or attaching it to the affected property itself.

POSTPONEMENT

An oral announcement, made in lieu of a scheduled trustee’s sale, that reschedule the pending sale. The rescheduled sale will always be at the same location unless it’s changed by re-recording a new Notice of Trustee’s sale that recites a different sale locale.

PUBLICATION
It is the act or process of publishing printed matter. An issue of printed materials offered for sale or distribution. It is a means of communicating information to the public.

QUALIFYING

The process of providing the auctioneer with the ability to bid before the trustee’s sale by showing the auctioneer the sufficient amount of certified funds required by law or indicated by the trustee before bidding.

R.E.O.
“Real estate owned” by a beneficiary/lender because it wasn’t bought by an outside bidder at the trustee’s sale.

RECONVEYANCE
A recorded document issued by a trustee that extinguishes a trust deed lien when the note it secured is paid off. The trustee will require the original note, a copy of the deed of trust, a request for reconveyance, and their trustee’s fee (from $65 to $80).

RECORDING
Filing a document with the county recorder to have it entered into the public record, giving constructive notice to the public at large of its contents. Helps establish priority amongst competing claims.

REINSTATEMENT RIGHT
This is the payment of a note, mortgage, deed of trust, etc, to bring it from default to good standing.

RELIEF FROM STAY

An order from the bankruptcy court allowing a lender to proceed with his default remedies (e.g. trustee’s sale) against a debtor . . . exempt from the automatic, protective shield of the bankruptcy court.

TITLE SEARCH

This is a review of all recorded documents affecting a specific piece of property to determine the present condition of title.

TRUSTEE

One who is appointed, or required by law to execute a trust. On who holds title to real property under the terms of a deed of trust.

TRUSTEE’S DEED
The deed issued by a trustee to the highest bidder at a trustee’s sale. The deed discloses on its face what the opening or minimum bid was at the sale and what the final winning bid actually amounted to.

TRUSTEE’S SALE
This is a non-judicial auction of real property, conducted by a trustee in the exercise of the power of sale clause, pursuant to the terms of the defaulted deed of trust.

TRUSTEE’S SALE GUARANTEE (TSG)

A special title report, for trustees only, that discloses all items pertaining to the ownership interests and encumbrances on a property in foreclosure. Also included is a list of all parties who recorded a special request to be notified if any NOD or NTS is filed against the particular trust deed in foreclosure. Furthermore it gives the trustee a list of all the local publications that qualify to advertise the Notice of Trustee’s Sale (once a week for three consecutive weeks). It’s also a contract of indemnification that protects the trustee and the beneficiary from the consequences of any title record error in their foreclosure proceeding.

TRUSTOR

The property owner who voluntarily puts a deed of trust against his/her property.

  1. Who is “guarantor”?

    I understand that lender = beneficiary, trustee = third party to the title, and borrower = trustor = maker = grantor = ME.

    As trustor of an owner-occupied house, am I also guarantor?

    Thanks
    Mark Acton

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