Welcome or Register
Back to Table of Contents

Creative Financing

Creative financing: You’ve heard of it, and, as a seller, the idea sounds pretty attractive. But, do you know everything you need to know about carrying back a second; essentially, about becoming a lender? You better know the same things that financial institutions know - you better know about lender’s title insurance.

It’s time to sell your $150,000 home, a home that you have owned for fifteen years, a home in which you have substantial equity. The loan terms call for a $20,000 down payment from your buyer, a new $100,000 loan from a local savings and loan, and for you, the seller, to carry back a note for the remaining $30,000.

Will you, the seller, need title insurance?

Yes, you will. Everyone who retains an interest in the property needs title insurance. When you took on the role of lender, you retained a record title interest which you will want to protect for the term of the loan.

But, why would you need lender’s title insurance when the repayment of your loan is assured by a lien in the form of a recorded deed of trust against the property? What could possibly go wrong?

You must insure yourself for the same reason that financial institutions obtain title insurance - for the protection of your investment. You must be assured that your lien on the property cannot be defeated by a prior lien or other interest in the property, which, if exercised, would wipe out your security.

Anything that involves the new buyer’s ownership rights to the property is of direct interest to you because you are holding the second mortgage. If such ownership rights are in question or defective, you may have trouble collecting your monthly mortgage payments. But, you say, there is nothing in your property’s history that could cause problems: no problems with easements, no problems with boundaries, no problems with rights-of-way.

Contrary to what may be popular belief, these matters are not the only source of title problems; a large proportion of title problems arise out of man’s interaction with man. The fact of a marriage, a divorce, a death, a forgery, a judgment for money damages, a failure to pay state or federal taxes - these occurrences can and usually will affect your rights as a mortgage lender.

As an example of what can befall the lender, did you know that a federal tax lien recorded against your buyer before the loan transaction is concluded may result in the loss of security in your home? Sophisticated mortgage lenders are aware of this possibility as well as many others which could jeopardize their loan security and seek the protection afforded by a lender’s title insurance policy.

If you are considering carrying back a second, be sure to get all the facts regarding the benefits of lender’s title insurance. Your local title insurance company should be happy to provide the information you need.

Article by CLTA

Back to Table of Contents

Quick Search


view all


Any

Any

No Min.

No Max.
agent photo
SALLIE CHESTER, REALTOR®
EXIT Real Estate Consultants
5175 Sunset Blvd, Ste 3
Lexington, SC 29072
Phone: 803-707-8595
Fax:  803-358-0889
Email: salliechester@exitrec.com

Client Testimonials

We, of course, are very happy and blessed to have had Sallie sell our home. Her team is wonderful also. We highly recommend Sallie Chester!  Melissa B. ~June 2019
Sallie and her team were very helpful and 100% on top of the entire selling process of our condo. From our original meeting, Sallie gave us great advice on selling quickly and for a fair price. She worked tirelessly to negotiate terms with the buyers' agent about the conditions of the transaction and kept us up-to-date with any changes that had come about. We used Sallie to both purchase and sell our condo and I would be happy to recommend her to anyone buying or selling property in the Columbia area. I truly appreciated her expertise and persistence in everything she did. Joshua S. ~June 2019
Sallie was very professional and dependable in all of our dealings.  We appreciated her counsel and experience, and would recommend her highly. Karen and Eddie W. ~May 2019
We recently purchased a house in Harbour Watch, that we absolutely love, through Sallie Chester.  Our relationship with Sallie began with a get to know each other phone call where trust was soon established.  We then made the trip from Virginia to South Carolina to meet Sallie in person, and she showed us several lots and houses that weekend, one of which we ended up purchasing.  The purchase took longer than anticipated because it was initially contingent on the sale of our house in VA.  Sallie was extremely patient and responsive to all of our needs throughout the entire process.  Sallie is honest, hardworking and provides excellent customer service.  We highly recommend using her services. Ann and Barry N. ~February 2019
Sallie Chester was everything we could have hoped for in the sale of our house; very knowledgeable with good advice and with such a friendly attitude. I would highly recommend Sallie to anyone who is seriously wanting to sell or buy property on Lake Murray. Shirley and David S. ~February 2019
View All

Equal Housing OpportunityMLS membershipREALTOR® certification

Real Estate Websites by iHOUSEweb iconiHOUSEweb | Admin Menu