Is Land Trust Really Needed??
I have listened to many investors teachings on sub2 deals. It seems it is split right down the middle on if to put the property in a land trust. Has anyone done it both ways and can you give your opion on which is better and why? I recently heard an investor say that he had a problem getting a bank to cash his check when he finally sold the house because his property was in a land trust. Any similar experiences????
If you have a property in a land trust and want to move it, just simply take it out of the trust. And do as you please with it. The property doesn't have to stay in the land trust to be sold or refinance.
hope this helps!
That sounds easy enough! I wonder what the guy was talking about then??Maybe he isn't as experienced as he says! Thanks for your help.
You're right about it being split.
It's a personal decision relating to your needs and your views of what's important. Guru's are split on the subject, and so are individual investors. Learn what you can about them, and make your decision based on what makes the most sense to you.
Jeff
It is also a "mental security" issue. If you feel secure doing the deal w/o Trust, go for it. If you want a little more mental security, use a trust. It's whatever makes you able to sleep at night.
Sam :-D
Why should I feel more secure with it in a trust though? Thats what I'm not sure of. Even the ones that say to put it in a trust also say the loans are almost never called due. So why do they put it in there? Just to increase the odds of it not being called or to hide the property from possible litigation from other problems. Some might think there is as much risk in trying to hide from the lender and having the seller come back to bite you in the ^&% later than there is to be open with the lender and with the seller about everything that is going on. That might help a lot of people sleep better at night. That is if they have the ability to refi if the lender calls the note. Hmmmmmmmm! I actually talked to an experienced lawyer in the area and he did suggest the land trust so who knows. I haven't decided which way is the better way for me yet.Thanks for the responses.
Good Evening Everyone,
I have one more question regarding land trusts. If you put a property in a trust is it more of a problem to get it insured and would you name yourself as an insured as trustee? I'd appreciate everyone's input.
Thanks in advance.
aimee
FINAO :-D
In their book Making Big Money Investing in Foreclosures without Cash or Credit, Authors Peter Conti and David Finkel say on pg 178 that one of the purposes of a land trust is so that you can get property insured in your name without alerting lender property has been sold and risking being subject to due- on- sale clause. If u take seller's name off the policy, the lender is on there as additional insured. As such, when policy is changed in any way, mortgagee will be notified and put two and two together.
Hey nyteflier,
I understand what you're saying. I think i should explain my question because I think maybe it was misunderstood. What my question was, let's take a hypethetical situation: I purchase a property sub-to under trust # xxx. I go to Mr. title insurance guy and say " i need to insure this property". In that situation who is named as the insured? My self, as trustee or trust # xxx ? Ofcourse leaving the prior seller and mortgage co as additional insured.
thanks,
aimee
Perhaps I did misunderstand u'r question. I assumed u were talking about property insurance, either landlord or rental property policy or homeowner's. U wouldn't want to have the previous owner's name on the poilcy and submit a claim, then have the previous owner's name on the claim check.
thanks for your replies nyteflier. i think i understand now. either way i'm sure if i ever have a problem there is always someone on TCI willing to offer their help.
thanks,
aimee
I used to use trusts all the time. I've got a whole drawer full of them for properties I bought. Now I' have second thoughts and no longer use them.
The trust is to 1) circumvent DOS and 2) hide from prying eyes of would be lawsuits.
But the DOS is really a non-issue. Make the payments, nobody cares. (Plus, there is an additional way to protect yourself.)
How about lawsuits? Well, consider first, who sues? It's tenants 99% of the time! TENANTS. Now, if you lease option, you are a glorified landlord, and open to suits.
However, if you owner finance your Sub2 deals, (as I do) then you are in the position of a bank, rather than a landlord. Who sues their bank?
So, if you sell on a wrap or CFD, rather than lease option, you own no properties. Equitable townership has passed. Therefore, if you own no properties, why do they need to be in trust?
It took me several deals to stop and ask myself why I was going through the trust procedure. A trust is like tinted windows on a limo. People walking by don't know who is inside, but if a cop walks up, you better roll down the window. Same is true if you go to court, identity secrets are all over if you have to go before a judge. (despite what the gurus selling trust courses tell you.)
And as an aside, one should always carry a blanket liability policy anyway. This is truly the first line of defense for asset protection, not a trust.
[ Edited by DaveT on Date 03/23/2004 ]
Quote:I go to Mr. title insurance guy and say " i need to insure this property". In that situation who is named as the insured? My self, as trustee or trust # xxx ?The titled owner is the insured for a title policy. In the case of a land trust, the trustee is the titled owner on behalf of the trust.
Most likely, the insured will read something like: John Doe, Trustee, 123 Main Street Trust dated xx/xx/xxxx
Dave,
Thanks for the clarification. I was just confused because I hear alot of different things. Like for example: you are named the insured or you as trustee and trust as bene, or just the trust as insured. But I think I like your approach the best.
Thanks again,
aimee
Quote:
On 2004-03-20 23:02, tbird wrote:
But the DOS is really a non-issue. Make the payments, nobody cares. (Plus, there is an additional way to protect yourself.)
Newbie question here: I assume you are referring to an add'l way to protect yourself from lender calling in the loan. What other way are you referring to?