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Virginia General Notice of Default for Contract for Deed form

so if you're closing the cellar finance real estate deal with the deed of there are three key documents that are there's the deed there's the promissory note and there's the deed of trust the deed is the document that essentially transfers ownership from the seller to the buyer and the note is like the legal instrument that just states all the terms of what the loan are the interest rate the loan amount the payments all that information and that the deed of trust is the document that actually gets recorded at the county level and it acts as a lien on the property until that loan is paid in full so the deed and the deed of trust get recorded but the promissory note does not and the way a deed of trust works is there's three parties involved there is the lender and there is the borrower and then there's a third party called a trustee and the trustee is usually designated as like a title company or an attorney or sometimes even a loan servicing company and this trustee is the person or entity that is empowered to go in and handle the foreclosure process if the borrower ever defaults on their payments and stops paying if a borrower ever stops paying the lender would notify the trustee and then together they would send out all the proper notifications as required by the state and once that's all done and they've complied with faulty proper state required notifications the trustee can then hold a public auction where they sell this property to another buyer or in some cases the lender can actually buy the property back themselves and some of that varies depending on what stage or cannon but that's effectively the nature of how a deed of trust works now in most cases when you're closing a self-financed deal with the deed of trust that closing is going to be handled by an attorney or a title company and in those cases that attorney or a title company would be the one listed as the trustee so if you're gonna be closing this yourself it would be up to you to find a third party like that to act as that trustee and usually states have certain types of professionals or licensed individuals who are authorized to act as trustees in these situations usually an attorney or title company will fit the bill but that's something you'd have to verify based on the state where your property is located along those same lines I will say that in most cases when people are closing a deal with the deed of trust like this that document is either being written specifically for that deal by an attorney or a title company or some other professional closing agent is using some kind of state specific templates to put it together and the language that's included in a deed of trust can actually be very very important because it can have implications for any kind of foreclosure scenario if you ever do have a borrower who stops paying this document governs in some very real ways what you're able to do and whether or not you're able to do a non-judicial foreclosure and usually in a lot of states that's why people use a deed of trust is because it's a much easier way to foreclose or repossess a property without having to go through a court procedure now in order to go that non-judicial route something that needs to be included in the deed of trust document is known as the power of sale language and this is the language that essentially allows the lender in the trustee to hold a public auction and sell the property to a third party if the borrower ever stops paying if that power of sale language is not included in there then they can't do it and they would essentially have to go through the courts in order to foreclose on the property so it's pretty important if you want to use a deed of trust and have that non judicial option that you include the proper state specific power of sale language in there now as a general blanket statement since I'm not an attorney I have to say that it really is best to have an attorney put this document together because they can address any specific issues that pertain to the specific property that you're selling or the state that your property is located in but on the same coin there are a lot of properties out there like for example vacant land I've sold lots of vacant land parcels with seller financing this is a very simple type of property there's nobody living on it there's no improvements on it it's just not that complicated of a property type to work with and in those situations a lot of times I'm comfortable putting together this document myself if I've got the right template to work with and if I understand all of the issues and laws and statutes in that state that pertain to seller financing because this is something that can be very different from to state so when I understand how my state works and I understand how the document works those are the kind of situations where I'm comfortable putting together this document myself and one option that's out there that I just think you should know about I'm not saying if and when you should do this but just something you should be aware of is the service called Rocket Lawyer I've been using them for several months now and I got to tell you they make it very very easy to put together this type of document and even when you do use them it's usually makes sense especially the first time to have an attorney just cross-check it and make sure all of these state specific languages in there but once you do that I mean the service is just awesome like you just have to fill out a little questionnaire and it prepares the whole document for you and something I want to show you in this video is exactly how that works so in the next few minutes I'm just going to take you through the exact process of how to fill out a deed of trust exactly and you can see what I mean it's very straight forward it's not hard to use it all and I actually do have an affiliate link to Rocket Lawyer there's a link beneath this video and if you click that link it'll take you directly to the deed of trust page so you can get started on your own and being that this is an affiliate link I will give a small commission if you click on that and sign up for the Rocket Lawyer service through that link but it's not a big deal if you don't want to use it's not gonna hurt my feelings main point is I just want to make sure that you're aware of the service because I've found it to be really helpful and depending on your situation you might find it to be really helpful as well so let's jump into the site and I will show you how it's done and in this example this is like a fictitious property this is not an actual deal I'm doing but I just want to show you how easy it is to plug in the information that you need and make it happen so let's say this one is in California click make document and then for the county let's say this is in Kern County again this is in California and for the date we'll just put today's date here as you can see I'm recording this on April 11 2016 and who was the borrower we'll say John Smith address 1 2 3 4 anywhere street and we'll say that this guy is in Beverly Hills California 9 out to 100 continue and then where will Johnson signed a deed of trust we were gonna say that this is gonna happen in California in his County so a Los Angeles continued and then if John Smith had a spouse we could add them here but for the sake of simplicity we're just gonna keep moving and keep in mind if you come across anything in this document where you just don't understand what you're supposed to be doing they've made it really easy here to just ask a question right there I haven't come across anything in this particular form yet that I didn't understand but if I did they just make it really easy to ask that question and it goes directly to an attorney in California or in whichever state you're working in and you'll usually get an answer back from them within the day so that's just a really helpful handy tip and for me I'm just gonna say I'm the lender here and then put in here Grand Rapids Michigan one five two five by the way that's not my actual address in case you wondered and then I continue and then go ahead and continue again now who is the trustee so in case you don't already know how I'd eat of trust works the way it's set up is that there's technically three parties involved the first party is the seller / lender so that's me and then the second party is the buyer / borrower so that's this fictitious John Smith character we just made up and then the third party is the trustee and this could be like your loan servicing company this could be an attorney that you've designated so assuming you've got a trustee set aside I'm just gonna put like lawyer Inc this person is gonna be I'll just sit it they're also in Beverly Hills and we'll hit continue and then is there a guarantor for the loan most of the deals that I do I do not have a guarantor like this so I would just say know the address of the property can't we'll just make up another thing here and then once you've got that info in we'll click continue and then for the legal description this is something you can typically get from the last deed of record you can also usually find it on the county website or if you subscribe to a service like real quest or agent pro 24/7 or something like that you can usually find this there it usually looks somewhat confusing something like range 62 section 78 again I'm just making this up as I go but if you've got a specific legal description in mind you can just copy it and paste it right into here they'll continue and then the date of the promissory note we're gonna say that we're closing this deal on May 1 hit continue and the amount will say that this isn't for 20,000 interest rate will make this nine point nine nine percent it's one of the nice things about seller financing is you can usually control all these variables and then what is the interest adjustment date this is actually a good example when I first see this question I don't really know what they're talking about and all I have to do is kind of read this explanation that they're saying and there's this little note it usually is the date the loan funds are distributed so say if we're gonna close this thing on May 1 and that's the date at which the quote-unquote loan funds are being put out there which really in my case is nothing but since I'm the seller financing the deal there ever had to be a date of which the funds are supposedly distributed it's on that date so given that explanation I'm just gonna make it the same date as the closing date and again if I didn't fully understand this I could just ask the question here and hit continue and how often will payments be made on the loan and we're gonna make this a monthly alright and then how much is each payments I just ran a quick amortization schedule on this and it was given me a payment of $425 a mutation at an interest rate of nine point nine nine percent so that's where that came from but as long as you got that number you just put that in there for the payment amount and could continue but then enter the address where the borrower is to make payments to the lender now this it kind of depends on whether you are servicing the loan yourself or if you've got like a third party loan servicing company in mind to kind of help you collect these payments if you're using a loan servicing company then you would put their address in here so that the payments are sent to them not to you because they're gonna be handling all that but if you're servicing it yourself or if you're using some kind of automated payment collection service where it's just hitting the person's credit card or bank account on the first day of each month or even if they're mailing a physical check to you each month in all those cases then you would just put your address here so I'm just going to assume that route put my address here again and then click continue and then what is the maturity date this is like the date of the last payment of the loan this is the date at which once that last payment is made this thing is paid off it's done they don't owe you anything else and in this hypothetical example if this loan is gonna last for 60 months or five years that 60th month is the last payment and the date at which it would be paid off so in this case if the loan payments started on May 1 2016 the last month would be April 1 2021 like that so once that's in there you would hit continue and then does the loan allow the borrower to prepay or make early payments without penalty I'm just gonna say yes it's completely up to you whether or not you want to do that I mean for that matter everything I'm talking about is totally up to you but in my situations I usually say yeah just because it's not a huge deal to me but I'll do that and hit continue and then what type of early payment does the loan allow at this point I could specify you know you're only allowed to pay off the entire thing if you're gonna prepay it like I don't want to mess with these little sporadic partial payments you can either pay it all off at once or not at all or I can say you can pay me whatever you want you can pay me an extra 50 cents each month pay me extra 100 bucks 500 bucks I don't care anything I will say that doing this second one is definitely easier in terms of tracking and then it also is kind of a deterrent for them to pay it off because obviously it's harder do you come up with the full amount either with your own cash or by refinancing it with a bank loan so depending on what you're willing to do that will govern which one you should choose I'm just gonna make it any amount cuz it's not really a huge problem for me and then I'll click continue and then we'll the deed of trust include a power of sale clause and this is actually a very important part at the time of this recording you're actually not able to use a deed of trust in all 50 states there are several where you can but not everywhere and then the ones where you can part of the reason why you want to use a deed of trust is because if that borrower ever stops paying you and you have to foreclose on it a deed of trust could potentially allow you to go through what they call a non-judicial foreclosure process which makes it much easier and less expensive to repossess your property but you can only do that if your original deed of trust document includes what's called the power of sale clause and as it explains here the power of sale clause allows the lender to foreclose on the property without court procedure in order to pay off the balance of the loan in case the borrower defaults so if you're gonna use the deed of trust pretty much in every situation you're always gonna want to click yes here I have no idea why you would not click yes here unless for some reason the borrower wasn't okay with that but just you know with all my deals if I am ever using a deed of trust I'm always clicking YES on this one so then once that's clicked you go ahead and click continue and then who's preparing this deed of trust this is where you would just put yourself or in this case I'll put myself because I'm literally the one preparing it there's not an attorney or title company or anybody else getting in the mix and doing this so put Seth Williams put my address you're gonna have the Michigan and hit continue and then who should receive the deed of trust after it's been recorded I'm gonna put myself again because I'm handling this closing and I'm gonna be facilitating all this documentation and then click continue and then it is now generating my deed of trust documents now I can see here the draft of what its gonna look like you know what I'm gonna do here is download it's and I can download it as a Word document as a text file as a PDF I'm gonna go ahead and do PDF just to see what that looks like I'll open it up here and then here it is as you can see all I really did there was just answer a lot of questions in the process of creating this and it went ahead and generated the document with all of the state specific appropriate language included in here it's got all of my property information all of the payment information the loan amount the maturity dates all the stuff that's really important and matters and I'll just show you here's that power of sale clause this is that all-important thing we want to have in there so that the foreclosure process is easier for us if it ever comes to that just a very straightforward easy way to get your documentation handled and then it's got the signature for the borrower slash buyer and then this is the notary page so they can get that notarized and that's really all there is to it and as you can see if I mean it is very very difficult for me to make mistakes there when all I have to do is just answer the questions and it really holds my hand and tells me exactly what I need to do whereas if I just had like a blank template that would certainly be helpful as well and that's really how I've done it most of the time to this point but still when you just have a word document there's just a lot more potential for you to miss things say if you're working with an old template and you forgot to update one little section of it all that stuff can cause problems but with this Rocket Lawyer system you're kind of starting with a clean slate and one other thing I'll just show you here if we want to go back and edit this say if we saw something in there that we didn't like we can do that as well and kind of back to my point about how every state is a little bit different if you click on this there are some states like I mentioned where you cannot do a deed of trust and for example some of those states are states like Florida Connecticut Delaware and if you look through this list here guess what you don't see Florida or Connecticut or Delaware or any of the other dozen states where you can't do a deed of trust because Rockit lawyer knows you can't do it so we're not even gonna give you the option of creating that document in those states so if I had just downloaded a random deed of trust template and tried to fill it out for another state without knowing that I can't even do in that state I would obviously have a problem so this is just another example of how Rocket Lawyer just sort of hold your hand and make sure that you're doing it right without making any huge mistake that would be much easier to make if you weren't using their service that's pretty much all there is to it as you can see it's very easy to create your documents with a Rocket Lawyer if you were trying to create a land contract or a warranty deed or a quick clean bead or anything like that it would be taking you through a very very similar process to what I just showed you in the cost of using Rocket Lawyer at the time of this recording is 39.95 a month or forty nine ninety-five a month based on what benefits you want there's also annual pricing which is obviously a higher price but you're gonna save some money on that I'm currently doing the monthly subscription for the premiums on the plan thirty-nine ninety-five a month and I just think it's been super helpful so far if you've got a business like mine where you're working all over the place and different day--it's or even if you're only planning to work in one state and you're just trying to figure out how things work there Rocket Lawyer is a great way to just get yourself established and yeah I just thought it was kind of a brilliant solution so hopefully you found that helpful if this looks like the right fit for you and kind of falls in line with your goals and what you're trying to do I'm gonna have an affiliate link to their website right beneath this video so you can go check them out and I will get a small commission from that if you decide to sign up and I thank you very much for that and if not if you're just using templates and you're able to get by without this kind of service then that's totally cool too anyway that's all I hope you found this video helpful thanks for checking it out hopefully I'll see you again soon