In: Accounting
Articulate the process of obtaining a secured interest in real estate! Go into as much detail as possible.
Parties to the transaction need to establish their security interest in real estate by publicly filing a notice of security in accordance with the laws and regulations and the statute of the state in which such real estate is situated. Generally, the document holding legal property of ownership of real estate such as deeds of trust and mortgages are required or rather must be publicly registered in a government office where the land is located. This offer is usually known as the "recorded of deeds" and this whole process is known as registration of deeds.
This method stated above is absolutely necessary to obtain a security interest in the real estate. It is deemed necessary to give notice of ownership rights to the ones purchasing the property. Deeds can also be for a person loaning money for or against the process, in such case also the whole process is very necessary and it becomes even more important to establish security interest so that the other party will have legal rights over the real estate property in case of any default on the loan/borrowings.
Hence we have established that an agreement or deed is is absolutely necessary to establish security interest. Now let's study as to what are the most common types of security interests or the type of agreements you can enter into :
a) Mortgages : A mortgage is a transfer of an interest in real property to a lender as security for a debt. The best example found in any country is when a person mortgages his property against a loan from the bank.
b) Deeds of Trust : This is a document which represents a title or a financial interest in a property which is transferred in the name of a trustee who is basically the holder of a property on behalf of the person entitled to benefits of the property known as the beneficiary.
c) Sale and Leaseback Contracts : In this type of contract, the original owner completely transfers all ownership rights to the other party and the other party leases the property back to the original owner on a long-term basis and on agreed upon rate.