Jim Valentine on Real Estate
Real estate has its own vocabulary that one must get familiar with to work in the industry. Buyers and sellers learn a lot during the course of a transaction, but there are still some words that can be confusing, sometimes for everyone. Take homestead, for instance.
The Homestead Act of 1862 helped with the settlement and development of the West. Signed into law by Abraham Lincoln, it was an opportunity for people to own 160 acres of land by paying a filing fee and working the land over a five-year period. About 270 million acres were given to people in this manner. Homesteading continued for over 100 years with the last homestead being granted in 1988 in Alaska.
Today’s homestead is the practice of protecting your domicile from judgments and other liens that were not voluntary. It protects the equity you have in your primary residence by filing a simple form. It does not protect you from being foreclosed on for not paying on a loan secured by the home, but it will protect you in case somebody sues you for something, rightly or not. Two homesteads, both dealing with your primary residence, but vastly different.
What is the difference between a mortgage and a deed of trust? Both secure a promissory note with a recorded security instrument, but they are different. In Nevada we use deeds of trust with a very rare exception, very rare. The word “Mortgage” is often referred to a loan kind of like “Xerox” referred to a copy from a copy machine back in the day when Xerox invented the copy machine. A mortgage is actually not a loan, rather a security instrument. The mortgage gives more security to the lender, but the requirements to get resolution for lack of payment differs.
In a mortgage situation, there are two parties involved, the borrower and the lender. In a deed of trust scenario there are three parties involved, the lender, the borrower, and a trustee. The trustee is often a title company or bank that holds the title in trust.
The borrower gets equitable title and the use of and responsibility of the property, but they don’t get legal title until they pay the property in full. One of the major differences between the two is that a mortgage requires a judicial foreclosure while a deed of trust situation allows for non-judicial foreclosures. That is what we have in Nevada, and it simplifies and expedites the foreclosure process in the event of non-payment.
The end of the escrow process is referred to as “closing,” i.e. – “we closed escrow.” That is when the deed has transferred to the buyer and the money delivered to the seller. In the eastern United States closing means coming together with lawyers, buyer and seller, and wrapping things up together. In the West, we do not need to come face to face, and we work with an escrow officer, who has attorney guidance and backing, to facilitate the successful closing of the escrow.
Whether you say tomaaato, or tomato, it’s all real estate and the language has a purpose when used correctly and understood. Understand your situation and what you are being told in the right perspective and you’ll have a better comprehension of what is happening and why. Ask your agent to explain when you don’t.
Communication is a wonderful thing. Real estate has its own vocabulary so make an effort to understand just as you would a new language when traveling. At least to say “hello” and “thank you.”
When it comes to choosing professionals to assist you with your Real Estate needs… Experience is Priceless! Jim Valentine, RE/MAX Gold Carson Valley, 775-781-3704. dpwtigers@hotmail.com.