Full question:
During the transfer of a note referenced in a Deed of Trust for value received from one party to another, will it hold its' position as the first note when a second note exists?
- Category: Real Property
- Subcategory: Deeds
- Date:
- State: Nevada
Answer:
A promissory note can be either secured or unsecured. A secured note means that the lender can take specific property, known as collateral, if the borrower fails to make payments. In bankruptcy, the lender may recover their loan value by taking the collateral instead of getting only a portion of the borrower's property after it is divided among creditors. Collateral can include various types of property, such as stocks, inventory, or accounts receivable.
To maintain priority over other claims against the property, the note must be "perfected," usually by filing it with the recorder's office in the county where the property is located. Generally, those who file first have priority over subsequent filers. If a note has been recorded, the creditor's priority typically transfers to a new creditor when the note is transferred. However, this can be changed by contractual terms.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.