Author: ft Editorial Staff

May 2007 Events

May is: Asian Pacific American Heritage Month National Bike Month Clean Air Month National Arthritis Month National Salsa Month National Barbecue Month National Preservation Month Older Americans Month Jewish American Heritage Month National Physical Fitness and Exercise Month   Special dates in April:   05/01  May Day   05/04  Star Wars Day   05/05  Cinco de Mayo   05/08  VE Day   05/12  International Nurses Day   05/25  Towel Day   For more information on the month of May, go to...

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Carryback foreclosure and resale costs

This article discusses the risks of financial loss by a seller on a carryback sale, and the safeguards needed to cover those risks. Protection is led by disclosures   An absentee owner is unable to effectively manage a small income-producing property he owns. Confronted with below market rents, unreliable tenants and deferred maintenance, he decides to sell the property. The condition of the property and its income will continue to deteriorate until it is sold to a local buyer who can provide hands-on management.   The owner contacts an agent for the purpose of marketing the property and locating a suitable buyer. The property has an existing fixed-rate, long-term loan which can be assumed by a qualified buyer. The owner and listing agent believe their asking price for the property is not set too high.   To pursue his asking price and pass on the cost of disrepair and the delinquent rent situation to the buyer, the seller lists the property with the agent’s broker to market the property for sale and locate a buyer. The listing terms include a low down payment and a carryback note and trust deed. The seller and his listing agent agree an acceptable offer must include a further-approval contingency calling for the owner to confirm the buyer is financially and personally qualified to purchase the property, and is prepared to cure the deferred...

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Judicial foreclosure

This article outlines the judicial foreclosure process, and presents the rights exercisable by property owners and junior lienholders before and after a judicial foreclosure sale. Deficient property value and recourse paper   When a trust deed note is in default, the trust deed holder’s collection efforts are very structured, particularly if the trust deed note evidences a recourse debt and the lender chooses to recover against both the property and the borrower.   To initiate collection efforts, a trust deed holder must first exhaust the security by resorting to the real estate described in the trust deed. The security interest in a property is exhausted when the trust deed holder forecloses on the property or when the trust deed holder’s trust deed is wiped out by a senior trust deed holder’s foreclosure. Only when the security is exhausted and the note evidences a recourse debt may the trust deed holder pursue a money judgment for any deficiency in the property’s value to fully satisfy the debt owed. [Calif. Code of Civil Procedure §726]   Foreclosure is a procedure of selling property to satisfy a debt secured by the property. Foreclosure of the property eliminates the right of redemption held by the property owner and any persons holding junior interests in the property.   A trust deed holder can foreclose on a property, which is the security for a note,...

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Cinco de Mayo

NOT Mexico’s Independence Day It is a common misconception that the 5th of May is Mexico’s day of independence from Spain. However, it is actually a commemoration of the day Mexican forces, led by General Ignacio Zaragoza Seguin, defeated the French in the Battle of Puebla in 1862. In order to fully celebrate this great day, it is important to eat a lot of chips and salsa. Listed below are some kinds of salsas and links to recipes. · Salsa roja, “red sauce”: used as a condiment in Mexican and southwestern U.S. cuisine, and usually made with cooked tomatoes, chili peppers, onion, garlic, and fresh cilantro (coriander leaves). · Salsa cruda (“raw sauce”), also known as pico de gallo (“cock’s beak”), salsa picada (“chopped sauce”), salsa mexicana (“Mexican sauce”), or salsa fresca (“fresh sauce”): made with raw tomatoes, lime juice, chilli peppers, onions, cilantro leaves, and other coarsely chopped raw ingredients. · Salsa verde, (“green sauce”): Mexican version made with tomatillos. Sauces made with tomatillos are usually cooked. Italian version made with herbs. · Salsa ranchera, (“ranch-style sauce”): made with tomatoes, various chilies, and spices. Typically served warm, it possesses a thick, soupy quality. Though it contains none, it imparts a characteristic flavor reminiscent of black pepper. · Salsa brava, (“wild sauce”): a mildly spicy sauce, often flavored with paprika. On top of potato wedges,...

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A carryback note becomes worthless

This article reviews how a seller may write off his cost basis in a note that was carried back on the sale of rental or investment real estate and is now uncollectible. Writing off an exhausted bad debt   A seller of real estate carries back a note executed by the buyer as payment for part of the sales price. The note is secured by a second trust deed on the real estate sold, junior to a first trust deed lien. The seller reports the sale on the installment method, deferring the payment of profit taxes until principal is paid on the note.   After the year of sale, the buyer defaults on the first trust deed loan. The first trust deed lender forecloses and, in the process, extinguishes the seller’s security interest in the property under his second trust deed lien. The unpaid carryback note is now unsecured.   The dollar amount the first trust deed lender bid to acquire the property at the foreclosure sale was the total amount of the principal remaining on the first trust deed. Thus, no sales proceeds remain to be distributed to the seller for payment on his carryback note.   The buyer is unwilling to pay off the note and the seller is unable to judicially enforce collection for the balance due on the now unsecured note. The buyer is not...

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