Land Trust Louisiana
I joined an organization, as an investor, that helps people with bad credit get a home. Basically an investor with good credit obtains the mortgage. Client with bad credit puts up the down payment. At closing deed to property put in land trust. Trust grants bad credit client tax benefits, appreciation, right of ownership, etc. Client pays mortgage, gets into mandatory credit counseling and refis usually in a year after credit issues are corrected.
I joined after addressing Louisiana specific questions to their corporate attorney who assured me that it was ok since the transactions are closed in Texas where land trusts are allowed.
I have 7 clients from Louisiana who need a home right now and have the down payment. I have many more that I've spoken to who are getting their deposits. I've spent considerable time working with these people. I also had to pay to become an investor with this group. I also recruited other investors from Louisiana to join.
Last week I sent 4 applications with deposits to the corporate office to begin processing. I received a phone call telling me that we can't do a land trust in Louisiana. It has to be done as a lease option. I explained that previous to joining I addressed this specific question with the corporate attorney who assured me it was ok. I was informed that that attorney is no longer with the organization and has been replaced by another. Futhermore I was told that the group isn't in the business of doing lease options and that I'm on my own!
The whole purpose of the trust is to protect the investor and client. It also protects from the due on sale clause that may be triggered by a lease option and helps defer taxes for the investor when the client refis.
My questions: what recourse do I have in lieu of a land trust for Louisiana? and what recourse do I have with this organization?
My question was addressed to the then current corporate attorney who set up and administered the trusts for the organization in a group meeting. Other people heard my questions and his answers.
Thank you,
Darlene
New Orleans, LA[ Edited by dstrahan on Date 06/01/2004 ]
Louisiana is a strange place. Unlike almost all the other states Louisiana law is based on the Napoleanic code, not english common law. Therefore much of what is true about forms of ownership in other states is not true in Louisiana.
You might begin with a complaint to the agency in Louisiana that regulates lenders but if this group has withdrawn from the state there may not be much they can do.
So how much money did you invest and how many investors did you refer? You may have recourse to get your money back by complaining to the SEC or the equivalent Texas agency. Accepting money from out-of-state investors is very tricky. You might call this bunch and ask about their Reg D filings, ask to see copies. Start making a stink that you want your money back and that of the investors you referred.
Then you could try to put together a similar service for your clients using your investors. But again, this is a highly regulated industry and you want to stay inside the lines. Three to five years is a long time in a real jail. Not just the TCI virtual kind.