AITD Vs. Trust Deed
What is the difference between an All Inclusive Trust Deed (AITD) and a Trust Deed? I'm planning on carrying some of the financing for my buyer and I'll need to issue an AITD to make the house security for the loan. I have a book which instructs on how to create a promissory note backed by a Trust Deed, specifically for CA. However, the book doesn't mention AITDs. So again, what's the difference? Thanks!
I'm no expert in this arena, but I'll take a shot. I think an AITD wraps a current loan.
[addsig]
Both place a lien on the property for the underlying note.
With an AITD the existing TD stays in place with the underlying note containing its own terms of repayment. The AITD is for a greater amount and its own terms of repayment includes the payment on the first TD. The AITD is junior in position to the first TD. In other states it's called a wraparound mortgage.
A buyer would request an AITD when they don't want to mess-up a senior TD with good terms and the seller is okay with leaving the first TD in their name.
Just a word of caution. Since doing a wrap is a way of taking advantage of existing financing, a due on sale clause may be invoked by the underlying first lender if the loan is not assumable. I recently read that in some states there are statutes requiring Title Companies to report to a lender any attempts to wrap their loans.
Perhaps someone with significant "wrap experience" can add their comments.