Real Estate Finance
Most real estate transactions involve financing of some sort. Few sellers can afford to pay cash outright. Before entering into a financed real estate transaction from either side, it’s important to fully understand the ramifications of any financing agreements. How the property is financed can have a huge impact on how likely the deal is to close, how quickly the seller receives payment, and what possible legal causes of action may arise if issues with title or structural integrity are later discovered.
The most common types of real estate financing are deeds of trust and mortgages. In both, the lender takes an interest in the property as a way of guaranteeing that the lender will repay the loan. The key difference is that a mortgage lender must go to court to foreclose on a property while a deed of trust usually contains a power of sale clause allowing the lender to foreclose without going to court. Often, the contract of sale will specify what type of financing must be used along with other conditions that must be met before transfer of title can occur.