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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Re: CC 2898 & Priorities Posted by Travis Farnsworth on March 12, 2006 at 7:18 PM In Reply to: Re: Money Judgement posted by Lughead on March 12, 2006 at 10:11 AM : not sure what you mean by equal priority? : virtually no lender would loan until the judgment is satisfied. : : I understand that any judgements filed before a property is bought have equal priority. In that case, would a lender be willing to make a loan to someone who has a judgement recorded against him/her? Civil Code 2898 provides an exception so that purchase money deeds of trust to take priority over existing liens created against the new PURCHASER, and does NOT take priority over liens already attached to the PROPERTY ( i.e. an abstract recorded against the seller ). That being said, one must search the public record far beyond the last insured transaction to establish what encumbrances are against the property. See the below example: 9-1-2005 ( Grant Deed granting property to David Debtor ) 9-1-2005 ( Trust Deed $250,000 with David Debtor as Trustor ) 9-5-2005 ( Abstract $10,000 recorded against David Debtor (attaches to all of debtors property by operation of law in the county it is recorded in. (ignoring declared homesteads)) 9-7-2005 ( Abstract $25,000 recorded against Paul Purchaser ( he doesn't own any property yet )) Debtor Sells House to Paul Purchaser with the benefit of title insurance. 9-10-2005 ( Full Reconveyance recorded releasing the $250K trust deed recorded on 9-1-2005 9-10-2005 (Grant Deed Recorded - David Debtor grants to Paul Purchaser) 9-10-2005 ( Purchase Money Trust Deed $300,000 Paul Purchaser as Trustor ) What are the priorities here? Well, our sellers ( David Debtor ) first trust deed recorded on 9-1-2005 is extinguished by the recordation of the full reconveyance on 9-10-05. We have an abstract recorded against David Debtor on 9-5-2005 for $10K which is in FIRST position ( the title company missed this lien ). Next we have an abstract recorded against the new purchaser prior to his purchase of the home ( Paul Purchaser ) which looks like it should be in 2nd position because it attached immediately the moment the grant deed was recorded granting the property to Paul Purchaser, however Civil Code 2898 provides a safeguard so that the Purchase Money Trust deed that was recorded immediately after the grant deed on 9-10-2005 will leapfrog ahead of the prior abstract. So in this example so far, the Purchase Money Trust Deed would be in 2nd position ( junior to the 9-5-05 abstract ) and the 9-7-05 abstract comes in 3rd position. Now Lets assume the judgment creditor catches the missed $10K abstract, the title company pays the claim and a release is filed releasing the abstract. We have the following priority: 1st Position - Trust Deed $300K recorded on 9-10-2005 2nd Position - Abstract $ 25K recorded on 9-7-2005 It looks odd, the previously recorded lien is actually junior to the later recorded trust deed and the transaction has been insured by a title company. This is why title must be searched further back in time than the last insured transaction because we find a lien which NOW affects the title to the property and was recorded BEFORE the last insured transaction. Travis Farnsworth Judicial Revenue Service, Inc. 3001 Red Hill Ave Building 5, Suite 205 Costa Mesa, CA 92626 Tel: 714-444-2538 Fax: 714-444-2568 e-mail travis@judicialrevenue.com web: Http://www.judicialrevenue.com Judicial Revenue Service Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : : not sure what you mean by equal priority? : : virtually no lender would loan until the judgment is satisfied. : : : I understand that any judgements filed before a property is bought have equal priority. In that case, would a lender be willing to make a loan to someone who has a judgement recorded against him/her? : Civil Code 2898 provides an exception so that purchase money deeds of trust to take priority over existing liens created against the new PURCHASER, and does NOT take priority over liens already attached to the PROPERTY ( i.e. an abstract recorded against the seller ). That being said, one must search the public record far beyond the last insured transaction to establish what encumbrances are against the property. See the below example: : : 9-1-2005 ( Grant Deed granting property to David Debtor ) : 9-1-2005 ( Trust Deed $250,000 with David Debtor as Trustor ) : 9-5-2005 ( Abstract $10,000 recorded against David Debtor (attaches to all of debtors property by operation of law in the county it is recorded in. (ignoring declared homesteads)) : 9-7-2005 ( Abstract $25,000 recorded against Paul Purchaser ( he doesn't own any property yet )) : Debtor Sells House to Paul Purchaser with the benefit of title insurance. : 9-10-2005 ( Full Reconveyance recorded releasing the $250K trust deed recorded on 9-1-2005 : 9-10-2005 (Grant Deed Recorded - David Debtor grants to Paul Purchaser) : 9-10-2005 ( Purchase Money Trust Deed $300,000 Paul Purchaser as Trustor ) : What are the priorities here? : Well, our sellers ( David Debtor ) first trust deed recorded on 9-1-2005 is extinguished by the recordation of the full reconveyance on 9-10-05. : : We have an abstract recorded against David Debtor on 9-5-2005 for $10K which is in FIRST position ( the title company missed this lien ). : Next we have an abstract recorded against the new purchaser prior to his purchase of the home ( Paul Purchaser ) which looks like it should be in 2nd position because it attached immediately the moment the grant deed was recorded granting the property to Paul Purchaser, however Civil Code 2898 provides a safeguard so that the Purchase Money Trust deed that was recorded immediately after the grant deed on 9-10-2005 will leapfrog ahead of the prior abstract. : So in this example so far, the Purchase Money Trust Deed would be in 2nd position ( junior to the 9-5-05 abstract ) and the 9-7-05 abstract comes in 3rd position. : Now Lets assume the judgment creditor catches the missed $10K abstract, the title company pays the claim and a release is filed releasing the abstract. We have the following priority: : 1st Position - Trust Deed $300K recorded on 9-10-2005 : 2nd Position - Abstract $ 25K recorded on 9-7-2005 : It looks odd, the previously recorded lien is actually junior to the later recorded trust deed and the transaction has been insured by a title company. : This is why title must be searched further back in time than the last insured transaction because we find a lien which NOW affects the title to the property and was recorded BEFORE the last insured transaction. : Travis Farnsworth : Judicial Revenue Service, Inc. : 3001 Red Hill Ave : Building 5, Suite 205 : Costa Mesa, CA 92626 : Tel: 714-444-2538 Fax: 714-444-2568 : e-mail travis@judicialrevenue.com : web: Http://www.judicialrevenue.com Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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