What Exactly Does Good Title Mean On Sub2?
Hi, i was wondering when i buy a house sub2 and then sell it to a conventional buyer exactly what is there lender going to consider good title to be? the reason i ask this is because when i put the house in a land trust, and since the transfer of beneficial rights from the seller to me is not recorded, when the lender does a title search how does he know that i own the prop? should i just present him with the notorized transfer of benef. rights, and will the lender be skepticall? thanx again for you help.
Good question, I would like to know the answer to that one myself.
You're overthinking this whole land trust thingy. The land trust does not really own the property, and never did. It control's it. The name on the title owns the property. It could be the name of your LLC, Your name, or read something like "John Doe - Trustee - ABC Land Trust" The lender doesn't do the title search. The Title Company, or the Attorney handling the closing will do that. When they do, The chain of title will read as it did when the person sold the property to you with one addition. "They sold it to you". (you being whatever entity you decide to title the property in) You have the ability to present the title company with whatever documentation required to prove that you are the right guy to be selling the property (The trust documents as needed), and the deal is done. The title co handles the closing, not the lender. The lender writes the check to the title co, the title co handles the paperwork and title transfer. Then if you're lucky, they write you a check too.
Move on now. Stop trying to make this a problem.
Jeff
P.S. I also wanted to remind you that using a land trust is a choice, and that you can do Sub2 without using them. John Locke's Sub2 manual does not cover land trusts because he doens't use them. If you are insisting on using one because you are trying to avoid the DOS, I would encourage you to not worry quite so much about that. Interest rates don't move so quickly that you'll wake up one day and it'll suddenly be worthwhile for them to foreclose on a performing loan. [ Edited by jeff12002 on Date 07/02/2004 ]
thank you luka, this is what i have been wondering the whole time. I want to put together a deal but i also want my exit strat. to go smoothly. As far as i understand it the benificial rights contract is not recorded but is notorized and is official,(will you personally keep this contract on file?) but yes like you said, when they(buyers lender) do a title search it is going to show that the sellers have benif. rights. So HOW do the lenders KNOW you have full benif. rights. Please will somebody please explain this? thanks, Ryan
looks like you beat me to it jeff. thanks for the info. Ryan
thanks jeff, your right i am overthinking things way too much. i just need to go out and do it. which believe me, im in the process of doing. i think i just have too much time on my hands while im waiting for my incompitent lawyer to finish setting up my LLC. thanks again, youve been a great help.
Coming back to the intent of the original question (at least what I think the intent was)...
The seller of the property is technically the trust. A trustee will sign on behalf of the trust so that the title can be transferred to the new owner at the close of escrow.
The lender will see the property is being sold and that they will be in first position for the new loan being taken out by the buyer.
Did that answer the question?
BTW - To make the trust aspects simpler consider how a living trust works (used by individuals for estate planning). You take the house you own in your name and you transfer the house to a living trust. The trust is the owner and you are most likely the trustee. Later (after you die) there is another trustee that takes over.
You could name a new trustee before you die. Hence the use of such trusts for subject to deals.
In all such trusts there is a trustee and a beneficiary. There can be more then one of each. The trust can be amended to change a trustee and/or a beneficiary. Such changes have no impact on who owns the assets that are held by the trust.
John
[addsig]
Good call John. I responded to this as a continuation of an earlier post. Not very helpful to others that weren't up on the other conversation we had.
Good call,
Jeff[ Edited by jeff12002 on Date 07/03/2004 ]