Interest on a Deed of Trust

[GoingBamboo]

What is the name of your state (only U.S. law)? ca

I inherited a deed of trust drawn between my grandfather to my father and stepmother. My father passed away and that’s when I obtained the deed of trust on his house. It had a face value of $50,000

The deed of trust only states the principle owed and no interest rate.

My stepmother attempted to sell the house. I provided the payoff which was the principle plus simple interest from the date the deed of trust was created.

I was contacted by an attorney stating that I could not collect interest on the deed of trust per California law and if I didn’t reform my demand letter to include only the $50,000 within a week, I was forfeiting all claim to the deed.

So the question, can I charge interest on the deed of trust principle when no interest rate is on the deed of trust and if I do not conform to the request, will I really lose my interest in the principle?

 

[tranquility]

No. You need the promissory note. The deed of trust is the representation of the deed being held by a third party in trust and represents ownership of the deed/property until the total amount is paid off. You cannot make up an interest rate or method. If you think there is a contractual loan with a contractual interest rate, you need the contract.

I'm not sure about the forfeiture of right provision in the law, but it sounds possible when a person refuses to act on their agreement of trust.

 

[seniorjudge]

No. You need the promissory note. The deed of trust is the representation of the deed being held by a third party in trust and represents ownership of the deed/property until the total amount is paid off. You cannot make up an interest rate or method. If you think there is a contractual loan with a contractual interest rate, you need the contract.

I'm not sure about the forfeiture of right provision in the law, but it sounds possible when a person refuses to act on their agreement of trust.

Yep.

Without that promissory note, you ain't got nothing.

Well...maybe an equitable interest of some kind.

 

[GoingBamboo]

Thank you for the information.

Ok, i think i see the problem then. The deed of trust was drawn 26 years ago and was meant to protect my grandparents for the money they loaned my father to buy the house. After 26 years and being that many things happened in the family, the note itself has been lost.

So without that note, I can only enforce the deed of trust for the value on the deed of trust?

 

[tranquility]

The deed of trust method of home loans as opposed to mortgage is a complex topic which I only know superficially. But, the deed of trust represents the deed, as I already posted. Any deal on a loan is a completely seperate issue. Your trust deed does not speak to that and cannot be used for anything beyond its purpose.