Not Using Land Trust Consequence....
What are the consequences of NOT using a Land Trust to deed over a property when doing sub2?
What are the consequences of NOT using a Land Trust to deed over a property when doing sub2?
Hmmm.............don't know about any "consequesnces" for not using a trust. The use of trusts just offer so many advantages.
They are free, the advantages are many, the only down side I can think of is that there are insurance companies who don't like to insure them but of course there are insurance companies who will. Given all the facts, I can't think of any reason NOT to use them.
Happy Holidays!
William Tingle
WilliamGA
omega,
Yes, some insurance companies don't like trusts. They claim it opens them up to additional risks but I suspect it is simply because they don't understand them.
The creation of a land trust is as simple as putting the documents together and printing them off of your computer. Once you have the templates to go on, you can create as many of them as you like.
You can get a local attorney to draw up your first ones for you and use them as a guide going forward if you like. There are several documents needed to complete the process.
William Tingle
WilliamGA
[ Edited by DaveT on Date 12/27/2003 ]
Quote:What are the consequences of NOT using a Land Trust to deed over a property when doing sub2?csilvestri,
If you can tell us why you would feel compelled to use a trust you can easily deduce the possible pitfalls of declining to use a trust.
Personally, I do not see any particular advantage to using a trust in a Subject To deal.Whether you transfer to a trust or to your own name, the DOS clause is still triggered (though the lender may choose not to exercise their option to accelerate the loan).
A trust may provide some measure of anonymity, but no real asset protection. You may not be able to easily refinance the property in your own right if the property is in a trust. If the lender accelerates the loan, you will need to act quickly.
Transferring the property out of the trust depends upon the availability of the trustee.
There are valid reasons to use a trust, and I have several trusts in place for my family. I just don't see the value of a land trust in a Subject To deal where you are cashed out within two years.
Now, if the seller is reluctant to give away title to the property without any recourse if you default on the note, then I suppose Bill Gatten's PACTrust can help rescue the deal because the seller still retains some percentage of beneficial ownership.
On the other hand, you won't need to resort to the complexity of a PACTrust if you just give the seller a performance mortgage instead. Now the seller has a lien on the property, and can foreclose to recover the property if you default on the mortgage loan.
Hi
Speaking of land trusts ,
I have all the paper work ready and notorized by myself and the trustee and was planning on getting them recorded this week.
Since this post. I'm wondering if I should call my ins agent and tell them the properties are going into a land trust and want to make sure they will continue to be insured?
I Do not want to change ins agencies
Any thoughts on this?
DaveT WROTE -
ersonally, I do not see any particular advantage to using a trust in a Subject To deal.
Quote
Whether you transfer to a trust or to your own name, the DOS clause is still triggered (though the lender may choose not to exercise their option to accelerate the loan).
Dave no DOS unless you obtain 100% of the Mortgage Borrower's Beneficial Interest in the Trust---my program suggests 10% as this allows the owner to Lease the land trust property for a 3 yr period of time with NO FOUL or DOS Worry ---so this isn't a totally K-Rekt statement
Quote:A trust may provide some measure of anonymity, but no real asset protection.
NO A$$ET Protection in a single member trust whereby the sole-beneficiary is the original borrower/owner Spouse or same-name family member: DUAL MEMBER Trust CANNOT BE SEVERED ---only the Interest can be Attached---NOT ENFORCEABLE BY A JUDGE IN COURT (Ask an ATTY familiar with Trust Law)
Single member Trusts can be deemed DRY if NOT Properly Structured at inception---
Quote:You may not be able to easily refinance the property in your own right if the property is in a trust. If the lender accelerates the loan, you will need to act quickly.
If you need a lender who makes loans to trusts try WAMU Well-Fargo or should you need to move fast just run down to the courthouse and REVOKE the TRUST for about $20-$30 and Deed the Title over to yourself Personally then REFI (No Seasoning Problem ---Show your chain of Title and Beneficial Interest in the Trust that held title ---Get a VERIFICATION Of MORTGAGE From the TRUSTEE or LOAN SERVICER You Chose when you set up the Trust 2-3 Weeks later go to the closing and treat yourself to dinner afterwards!
Quote:Transferring the property out of the trust depends upon the availability of the trustee.
Use a Trustee you Know (not necessarily related to, use a bank or credit union ask if they have Trustee services, call around to Title co.s and ask them the same. Maybe ask a legal beagle in your are who knows about trusts what they'll carge you? I pay $144 a year for my Trustee who is a non-biased not-for-profit Corp they've been around since the late '80s. ALWAYS KNOW WHERE TO FIND THEM
LynLiz:
Ask your Agent to place the TRUST onto the original policy (RIDER) as :
An ADDITIONAL INSURED (BENEFICIARY)
This is really all that is needed---no need to change or get a New policy.
Hope this helps!
Derrick