Questions and Answers

QUESTION: What is the common forms of property ownership?

ANSWER: There are a variety of forms of ownership of property. The more common form of ownership is Joint Tenancy: property owned by two or more people at the same time in equal shares; typically referred to as the four unities (unity of time, title, interest and possession vesting in the property.

QUESTION: What is adverse possession?

ANSWER: Traditional common law provided a method for someone to obtain title to land through use. The common law rules for adverse possession have been codified under both federal and state statutes. A typical statute allows a person to get title to land from the actual owner simply by using the ...

QUESTION: What can protect me for any potential deficiency balance after foreclosure?

ANSWER: Some states have anti-deficiency laws which protect purchasers of residential real property used as his/her primary residence pursuant to a purchase money mortgage. In the event that the purchaser fails to make the mortgage payment and the property is foreclosed (title taken by the lender through a legal procedure) and sold to pay the mortgage, a deficiency between the sale price and the outstanding balance of the mortgage could occur. Under anti-deficiency laws, if the mortgage is a purchase money mortgage for the purchase of a dwelling occupied by the purchaser, the purchaser will not be held responsible for any deficiency - the lender can only recover the property and the proceeds of a subsequent sale - the purchaser does not pay any deficit between the sale proceeds and the outstanding loan balance. Anti-deficiency laws typically provide no protection for non-purchase money mortgages (such as a second mortgage obtained after the original acquisition) and there is no protection when the property is not used as the primary residence of the purchaser.

QUESTION: What is a quitclaim deed?

ANSWER: A quitclaim deed is a real estate document that legally transfers interest in property from one person (the grantor) to another (the grantee). A quitclaim deed is considered a fast, simple way to do a property transfer; and as such, quitclaim deeds do not include any warranties on the property.

QUESTION: What happens if I cannot make a mortgage payment?

ANSWER: If you are unable to make a mortgage payment, then the lender can begin the process of foreclosing on your house. When you borrow money to purchase a home, your loan is referred to as a "secured" loan because it involves an asset that secures the lender's interest. In this way, a mortgage differs from other forms of loans or credit. That asset, or the "collateral", is the house. As such, if you are unable to make payments on the loan as promised, the lender can take your house.

QUESTION: Can my house go into foreclosure if I make a late mortgage payment?

ANSWER: The exact rules for foreclosure vary slightly by state. For example, in some jurisdictions a judicial foreclosure is required and the lender must go to court to get a foreclosure judgment against you before he can take your house. In other jurisdictions the lender is able to follow a different process, called a non-judicial foreclosure, and simply send you a bill of sale or notice of sale and sell your home at auction if you don't pay. Some states allow lenders to pursue you for a "deficiency judgment" if the sale of your home at a foreclosure auction doesn't generate enough cash to pay off the full balance you owe. Losing your home to foreclosure can be a devastating process. However, rest assured that a lender isn't going to foreclose on your house for one missed payment. From the time you first receive a notice of default when you miss a payment to the time when your lender actually foreclosures, several months may sometimes pass. You may also be able to talk to your lender to negotiate a better option than foreclosure if you know you are going to have a hard time making payments. Lenders don't usually want to foreclose any more than you want to lose a house, and may be open to alternatives like renegotiating the loan or arranging a short sale.

QUESTION: What are the various types of mortgages?

ANSWER: There are many popular financing options for home purchases. See our section on Mortgages. The types of mortgages that are typically available to prospective homebuyers are: (1) Conventional: With a conventional mortgage, the lender obtains a lien or defeasible legal title to the property in return for the payment of the amount of money lent. (2) FHA mortgage: An FHA mortgage is a conventional mortgage which is insured in whole or in part by the Federal Housing Authority. (3) Purchase money mortgage: A purchase money mortgage is one that is given to secure the loan which is used to buy the property. A first (senior) mortgage on the property has priority over any second or subsequent (junior) mortgages on the property; the senior lender has a more secure interest in the event of a default since the senior obligations are paid first in the event of foreclosure and sale. (4) Adjustable rate mortgages: An adjustable rate mortgage (often called an "ARM") offers a fixed initial interest rate and a fixed initial monthly payment. After the initial period is over, the rate and term of the mortgage can be modified at predetermined times under the agreement to reflect the current market mortgage rates. There are other mortgage options, such as balloon mortgages, shared-equity mortgages, biweekly mortgages, reverse mortgages, and buy downs.

QUESTION: What is real property?

ANSWER: Real property is generally defined as land and things permanently attached to the land. Things that are permanently attached to the land include homes, garages, and buildings, and may also be referred to as "improvements." Substances that are beneath the land (such as gas, oil, minerals) are also considered permanently attached. Other items that can be attached to the land but that aren't necessarily permanent, such as mobile homes and tool sheds, are not considered to be real property.