- A deed of trust documents a mortgage lender's security interest in a piece of property. Such property typically includes the land surrounding a home or commercial building along with any buildings. When the lot reduces in size due to a condemnation or partial sale of the property, the mortgage lender may require payment for the portion of condemned or released property. Mortgage lenders may order appraisals for determining the appropriate price for portions of sold or transferred property. The lender will then send a demand for payment to the buyer or transferee. Mortgage lenders may also accept offers by state or local governments as compensation for partial condemnation of a property.
- A deed of trust is a mortgage document executed between a mortgage lender, homeowners and a trustee company. The trustee holds title to the property "in trust" until the borrower pays off or satisfies the mortgage loan in full. When title to part of the property securing a deed of trust mortgage sells or transfers, the trustee "re-conveys" title to the portion of real estate to the entity acquiring it. The mortgage lender applies funds paid for the portion of property to the mortgage loan balance. The lower mortgage balance may reamortize to provide lower monthly payments, or the mortgage company may reduce the mortgage balance without adjusting the monthly mortgage payments.
- The title to real property typically provides for government and local agencies' right of eminent domain, which provides for public acquisition of private property when needed for the public good. Examples may include the seizure of lands for building freeways, highways and widening existing roads. Problems may also occur between neighbors disputing lot lines. Selling all or part of a lot for subdivision can also cause title problems and legal challenges. Scenarios involving transfer of part of a mortgaged property require the mortgage lender's agreement to release its interest in the property separating from the original lot. The legal description contained in the deed of trust and associated mortgage documents must be amended and re-recorded to show amended new legal descriptions and loan amounts.
- The legal description contained in the deed of trust and associated mortgage documents must be amended to show the revised legal description and lot lines. Mortgage companies record new documents reflecting the amended legal descriptions and mortgage loan amounts. Mortgage companies may require homeowners who default on mortgage payments or owe other amounts to repay these amounts in addition to the amount they received for releasing part of the property. Examples could include past due payments, late fees, foreclosure fees, funds advanced for paying property taxes, hazard insurance and special assessments. Upon receiving required amounts and verifying that the new legal description for the property are correct, the mortgage lender will record a document releasing its legal interest in the transferring or selling property.