Escrow companies serve as a neutral third-party that collects and disburses payments, monitors accounts and holds important documents for buyers and sellers, landlord and tenants and creditors and debtors.
In the case of an REC, a General Warranty Deed conveying legal title to the buyer (in the event the buyer satisfies the terms of the REC) and a Special Warranty Deed conveying the property back to the seller (in the event of buyer’s default) are deposited with the escrow agent to be held until either the buyer satisfies all conditions of the REC or the buyer defaults. This is important because... MORE
- With Mortgages and Deeds of Trust, equitable and legal title is immediately transferred to the buyer at closing, meaning the buyer receives a deed of some sort. The parties enter into a Promissory Note and the Mortgage or Deed of Trust serves as a security lien against the property for repayment of the Note.
- With an REC, equitable interest in the property is immediately transferred to the buyer, but legal title to the property remains with the seller until such time as the buyer has fulfilled all terms of the REC... MORE
- A private or hard-money loan is a loan from a private or non-traditional lender. The asset being purchased, typically real property, is used as the collateral for the loan.
- In New Mexico, there are certain circumstances under which a private lender must be a Mortgage Loan Originator. Under the New Mexico Mortgage Loan Originator Licensing Act (“Act”), a "mortgage loan originator" is defined as... MORE
RECs are the most common seller financing instrument used in New Mexico. With an REC, the seller transfers equitable interest in the property to the buyer upon execution of the REC, while the seller retains legal title to the property until the buyer satisfies all conditions of the REC. However, under long-established New Mexico case law, the buyer is, for all intent and purposes, the “owner” of the property; the seller is considered the trustee and has the right to receive payments for the property... MORE
DETERMINING IF THE RESTRICTIONS ON SELLER FINANCING APPLY TO YOUR TRANSACTION:
Regulation Z was issued to implement the federal Truth in Lending Act (TILA). Generally, Regulation Z applies to consumer credit transactions secured by a dwelling; however there are exemptions to this general rule (see below). A “dwelling” is defined as a residential structure that contains one to four units, whether or not that structure is attached to real property. The term includes an individual condominium unit, cooperative unit, mobile home, and trailer, if it is used as a residence. The following transactions are EXEMPT from Regulation Z...
Generally, if a buyer defaults under an REC, the seller will send the buyer a Default Notice which specifies the default and explains how the buyer can cure the default and the time frame for doing so. Most commonly, the buyer is given 30 days to cure the default, but this time-frame is a negotiable term of the REC... MORE
When buying real estate, it important to confirm the seller owns the property and to know what, if any, liens are attached to the real estate. This can be accomplished by conducting a title search. Additionally, the buyer may wish to purchase title insurance which may protect the buyer from financial loss due to defects in a title to a property. In the case of a REC, the buyer needs to be aware of all seller liens, so that the buyer knows that if he/she satisfies all conditions of the REC, he/she will receive clear title to the property... MORE