Defeasible estates are present estates not contingent; they’re conditioned upon some event that may end the estate. You would be entitled to tax benefits. Regarding refinancing–I’m not sure how most lenders view an estate less that fee simple absolute–you may want confirm this before you get too creative.
There’s no defeasible fee exception although others may weigh-in as some seem obsessed with the dos clause. This seems like a waste of time and you’re taking less than FSA estate–why? To avoid dos? You said you’ve had a note called? What state are you in?
I have an upcoming deal and I’m trying to avert the “Due on Sale” (which did happen to me once) and was wondering if this was a better way:
Instead of doing a “Subject To” transaction and obtaining a Bargain and Sale Deed with Covenants I am thinking about trying to acquire “Fee Simple Determinable” or “Fee Simple Defeasible” interest on the Deed instead. The latter forms of interest are contingent upon specific performance of some future event taking place (refinance, assignment, sale, stated use etc.), and are voidable in the event it does not…and that provides an additional tier of protection to the current owner.
Moreover, since these forms of interest represent an ownership interest, rather than an undefined beneficial interest (as is often the case in unrecorded options) I should be entitled to the tax benefits? Correct?
I’m also assuming that it should be easier to refinance after 1 year of seasoning on the existing note?
As for the current lender, yes, a transfer did take place, but not all inalieable rights have been conveyed, therefore, any action by the Lender to call the Note via Due on Sale could be thwarted?
Any feedback on this approach would be appreciated. Thanks,
Steve