Hi Prospects & Friends,
Some of us from time to time have either owner financed a rental property, or been involved in the transaction of the owner financed rental property whether you were the real estate broker or agent, or title company or real estate attorney. Owner financed rental properties are similar to bank mortgages with regards to having a deed of trust with venders lien and a note recorded in the courthouse. These legal documents act as a security of legal protection to protect the seller in case the buyer defaults, just like as if it was a mortgage with a bank. Many don't bother to realize when a buyer pays off their mortgage the bank or mortgage lender will automatically release the lien from the securement of the deed of trust with venders lien, and send the buyer a copy of the release of lien. In the case of owner financed rental properties, majority of the sellers who are holding the deed of trust with venders lien don't bother to have this done, since their not thinking like a bank or mortgage lender, and this becomes a serious issue if the rental property is finally paid off, but their is no release of lien recorded in the courthouse specifying so. This will further cause more real estate issues if the buyer doesn't bother to request the seller to have it done either, since it will create a cloud on title which would cause the buyer to have issues with the title company, if they ever sold it, and had to open title at a title company. So too eliminate this always remember when you owner finance or buy owner financed rental properties, when you pay them off you need to get a release of lien from the seller and get it notarized and recorded. This legal document has to be notarized in order to be effective, so make sure you have a notary. We offer real estate notary services, and can handle this task if live in the state of Texas. Most sellers will want you to provide this document, since it is you who wants it, so don't pass on this thinking you're ok not having it, because ignoring not getting a release of lien from the seller when the note is paid off will cause as I mentioned before cloud on titles, and other serious issues like if the seller passes away after you paid it off, and you never bothered to get them to sign the release of lien acknowledging you paid off the rental property in full from the terms of the note in the deed of trust with venders lien. Release of lien documents aren't just documents that can be drafted by self, they do have to be done by a real estate attorney or any attorney who specializes in real estate documents, so also understand you will have to have this document drafted by an attorney and recorded in the courthouse, as well as notarized.
