2nd deed of trust filing

[Jonathan Orr]

Hey BP, I am setteling a lawsuit and a portion of the settlement is that I am securing my settlement with a 2nd trust deed on a property the defendant owner.  To paint the picture, the building is worth approximately $4 million.  He has a traditional mortgage on it for $1.25 million.  My 2nd trust deed will be for the amount of ~250k.  The property is located in Orange County CA and I know of what I need to do to file the 2nd deed (my attorney is preparing all of the documents).  My question is, do I have to notify the 1st mortgage or is that the responsibility of the owner of the property?  

Not to worry, I am taking the steps that if he defaults on my 2nd trust deed to go through the foreclosure process but I want to make sure after I file it correctly that I am not missing anything I may need to do (such as notify the 1st or anything else).

Any recommendations or tips is appreciated!

[Doug Smith]

The filing of the 2nd DOT will constitute constructive notice to the 1st lien holder, so you don't need to contact the 1st mortgage holder. Keep in mind that if the owner quits paying the first, the 1st mortgage balance can go up due to legal fees, interest, fees, etc and push your lien position back. If the property owner refinances the property, the first lien holder would need to either pay you off or get you to sign a "subordination agreement" to allow them to resume their first lien position. I assume your attorney has run a title search on the property to assure you that you are truly in 2nd position? I do hope that helps.