The deed of trust is the predominant security instrument used in California. The note and mortgage is an alternate form for financing real property.
As with the deed of trust, the note is a promise to pay a debt. Unlike the deed of trust, the mortgage is a lien on the collateral property, with legal title remaining in the name of the borrower.
While a note by itself is a fully enforceable promise to paya debt, a mortgage always needs a note to be legaly valid.
A note secured by a mortgage is essentially the same as a note secured by a deed of trust.
A mortgage is a lien on a property to secure the promise to repay a debt.
The only way a lender has to notify the world that there is a lien on a property is to record the mortgage at the office of the recorder in the county where the property is located.
Without the recording of the lien only the borrower and the lender would know of the transaction.
This recording will take place before the proceeds of a loan are distributed.
The parties to a mortgage are the borrower(mortgagor) and the lender (mortgagee).
Rights owned by a mortgagor may be pledged as collateral for a loan.
The portion of the mortgage that pledges the mortgagor’s rights is called the granting clause. The words create a lien the mortgagee will either release when the loan is satisfied or pefect into a full legal fee if there is a default.
All property in a mortgage must be described accurately to prevent any future controversy.
A mortgage will usually include a defeasance clause stating that the mortgagor will regain full free and clear title upon the repayment of the debt.
Failure to keep the agreement will cause the whole principal sum and the interest at the contract rate collectible by foreclosure of the mortgage as if the the entire principal was due at the time of any such failure.
As further protection of the lender’s interests, the borrower is also required to maintain the premises to preserve the value.
A mortgage must be signed by the borrower accepting the conditions of the contract and these signatures must be notarized.
When a mortgage is paid in full it is removed from the records by recording a satisfaction of mortgage form.