Author: ft Editorial Staff

Assignment of rents clause

This article discusses the uniform rules for enforcement of assignment of rent clauses. The lender’s rent collection scheme An assignment of rents clause is commonly placed in all trust deeds. The clause includes rents as additional security to the real estate described in the trust deed. The rents clause in a trust deed transfers to the beneficiary (lender) the right to collect rental income from the income-producing real estate described in the trust deed following a default on the note, trust deed or other secured obligation held by the lender. The rents clause is legally referred to as an assignment of rents, issues and profits clause. Two types of assignment of rents provisions exist: An absolute assignment. A conditional assignment. However, the distinction between the two types of assignment of rents clauses is not of concern to the holder of a trust deed recorded on or after January 1, 1997. A trust deed executed and delivered after 1996, containing either type of assignment of rents clause, creates a present security interest in existing and future leases, rents, issues or profits on the secured real estate, and is generally referred to as a lien. [Calif. Civil Code §2938(a)] The 1997 statutory scheme provides for uniform enforcement of all assignment clauses, no longer leaving the details to the trust deed contract. For assignment of rents clauses recorded before 1997, the rules...

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August events

August is: National Inventors Month; National Water Quality Month; and American Artist Appreciation Month. Other (unusual) July holidays and events 8/1   International Friendship Day start of National Clown Week 8/8   start of National Smile Week 8/13   International Left-Handers Day 8/15   The Wizard of Oz, starring Judy Garland, premieres in Hollywood, California in 1939 Woodstock opens in 1969 start of National Friendship Week 8/28   Martin Luther King, Jr.’s “I Have a Dream” speech given in...

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The Olympics

According to the International Olympic Committee, the first Ancient Olympic Games were held in 776 BC on the plains of Olympia in honor of the Greek gods. Held every four years until 393 AD when Emperor Theodosius banned the Games as being a “pagan” event, the Ancient Olympic Games were to the Greeks what Mecca is to the Muslims. From across the (often warring) Greek city-states, some 40,000 athletes, spectators, artisans and pilgrims would journey every four years to the southwestern end of Greece, some 200 miles from Athens, to take part in the glory and festivities of the Games and to revel in their common Hellenic heritage. This pilgrimage was possible due to the tradition of ekecheiria or “sacred truce.” Imposed prior to the opening day of each Olympiad, the sacred truce allowed everyone to travel in total safety to and from the Games. Surrounded by the blue mountains of Arcadia and numerous religious temples and shrines, including the spectacular Temple of Zeus (one of the Seven Wonders of the Ancient World) which featured the 40-foot tall gold and ivory statue of Zeus created by the famous Greek sculptor Phidias, the attendees could participate in various pagan religious rites, public feasts, drinking parties and beauty contests, or visit temples, sideshow booths, palm readers and prostitutes. Eat, drink and be merry indeed. Oh, and there were the sporting events...

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Working the AITD

This article discusses the advantages of a carryback all-inclusive note and trust deed (AITD), the forms to be used and the terms to be negotiated. Flexible carryback financing As a debt instrument and security device for the credit sale of encumbered real estate, the all-inclusive note and trust deed (AITD) provides brokers and buyers with the flexibility needed to finance the balance of the sales price remaining unpaid after a down payment. For a buyer, the AITD is all the financing needed to acquire encumbered real estate with a down payment. The principal amount of the AITD includes both the seller’s unpaid equity in the property and the unpaid balance on the existing loan which will remain of record, called the wrapped loan or underlying loan. The buyer makes monthly AITD payments to the seller. The seller, in turn, makes payments to the underlying lender. The advantages of an AITD over a standard second trust deed are mainly for the seller. However, the buyer, seller and lender all benefit since the buyer does not assume the wrapped loan. For the seller, the benefits of an AITD include: a greater yield than could be negotiated on a standard second trust deed note, a financial advantage due to the AITD note’s overriding interest rate feature; a reduced risk of loss due to a default on the underlying loan since the seller...

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Property related disclosures

This article reviews a broker’s use of unverified information when marketing real estate. Sold “as-is” is a prohibited disclaimer – sell property “as-disclosed” A broker and his sales agents must disclose the physical nature and condition of a property when soliciting an offer to purchase. Brokers and agents have a duty to timely disclose to all parties involved in a real estate transaction any significant physical aspects of a property that may affect the property’s market value. To comply with this duty, the listing broker (or seller) of a one-to-four unit residence must provide the buyer with a Transfer Disclosure Statement (TDS) prior to making an offer and disclose all defects then known to the broker or the seller. [Calif. Civil Code §§1102 et seq; See first tuesday Form 304 accompanying this article] To be effective, property disclosures must be made to the buyer before offers are prepared and prices agreed to. If not, the buyer may: Cancel on discovery of the broker’s failure to previously disclose the property’s condition. OR Close escrow and seek recovery of the costs to cure the belatedly disclosed and previously known defects, unless a contingency exists in the purchase agreement for further approval of the property’s condition. Any attempt to have the buyer waive his right to the mandated property disclosure statement is unenforceable. Failure to disclose property conditions is against public policy....

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