A Nevada property has two deeds of trust recorded against it: a first deed of trust for $300,000 recorded in 2018, and a second deed of trust for $80,000 recorded in 2020. The property is sold at a trustee's sale initiated by the first deed of trust holder for $320,000. How are the proceeds distributed?
Correct Answer
B) The first deed of trust holder receives $300,000, the second deed of trust holder receives $20,000, and any remainder goes to the borrower
In Nevada, lien priority follows the 'first in time, first in right' principle based on recording dates. When the first deed of trust holder forecloses, the sale proceeds are distributed in order of lien priority: first, the costs of the trustee's sale; then the first deed of trust balance ($300,000); then junior lienholders in order of priority. Here, the second deed of trust holder would receive $20,000 (the remaining proceeds after paying the first lienholder). Any remaining funds after all liens are satisfied would go to the borrower.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
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