cash flow due to a late payment by a borrower, a client can become a partner in several syndicated mortgages with other lenders instead of owning a loan outright. Mortgages are registered in the name of the client(s) or the client(s) company against the property in the Na onal Registry. Trusts have the client or client company name in them, but are registered in the name of the trustee, a law firm specializing in trusts that Casa Canada has used for many years. The lender can receive a copy of the registered document. Funds are not disbursed un l proof that the loan documents are registered, so it is not possible for another loan to be registered before ours. A mortgage or a trust? Trusts are the preferred method of lending, as property tle can be transferred rela vely quickly if the terms of the trust are breached. There is no court procedure, simply a set of steps involving a property auc on and then transfer of tle. Casa Canada’s legal people handle the procedure on behalf of the client where necessary. The downside of a trust is that due to a recent law,
January/February 2014
property registra on fees must be paid every me a property is put into a trust. This expense is paid by the borrower, but increases the cost of the loan. The registra on fee is based either on the amount of the mortgage or the registered value of the property in the Na onal Registry, whichever is greater. The cost is prohibi ve should the loan be small in rela on to the registered property value. For example, if someone wanted to borrow $20,000 on a property registered at $300,000, the borrowing cost would be dispropor onately high, as the registry fee would be based on $300,000. In this case we would recommend a mortgage. It is unlikely a borrower will let a property that valuable go into foreclosure, and if they did it would be worth while for the lender to wait for court to grant tle. The foreclosure process can also be sold to another investor. Should you be interested in more informa on or how you can par cipate in real estate based loans, contact Ryan Piercy in the ARCR office, or Monika Trejos in the Casa Canada Administra on building, 150 meters east of Soda Tapia. Either can be reached at 2222-1722, or by email at monikatrejosn@gmail.com or r.piercy.9@ casacanada.org.
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