Wrap-Around Question - Posted by Vincent

Posted by Vincent on October 09, 1998 at 07:34:33:

Appreciate the info, John.
That was pretty much my assumption, but I was having a hard time finding confirmation in the literature.
Thanks for your time and input.

Wrap-Around Question - Posted by Vincent

Posted by Vincent on October 08, 1998 at 12:58:36:

Who maintains responsibility/liability for the property when a wrap around mortgage is in place?
Does the Buyer, who is on but does not hold the 2nd note, have responsibility, or doe the Seller who
holds the note?
Just a quick legal question.

Re: Wrap-Around Question - Posted by John Behle

Posted by John Behle on October 08, 1998 at 19:17:58:

A wrap around loan takes two forms - an All Inclusive Trust Deed (AITD) or Contract for Deed. Both are forms of ownership of the property and the new buyer has all of the responsibilites.

An AITD is just a lien on the title meaning the lender has a right to foreclose and take the title back under default provisions.

A contact is a form of installment purchase. The actual title is held by the seller and it transfers when he/she is paid in full, but the buyer has all of the rights of ownership otherwise.

This isn’t meant to go into great detail on the two, there are substantial differences, but in either case, the buyer is still responsible as an owner for all that happens. The risks of the seller do differ between the two. In most cases (it varies state to state) the seller is better off with an AITD form of wrap.