Re: If Bill doesn’t mind, I’ll try my quizziness. - Posted by Brad crouch
Posted by Brad crouch on May 08, 1999 at 13:03:10:
JohnBoy,
Bills’ answer really cannot be improved upon, but since you’re asking me, I feel obliged to say something more.
> If your not living in the property and you gave
> someone else the right to live in that property, then
> doesn’t this relate to transfering your right of
> occupancy? If the buyer is paying you on time and
> living in the property, then you couldn’t just throw
> him/her out and make them give of their right to
> occupy the property per your agreement…hence, you
> gave up your right to occupancy. Correct or not?
The process of setting up the trust correctly and legally is the “important” thing here. If this is done right, the protection of the Garn St. Germain Act is in effect. The trust agreement does not convey “occupancy rights” to anybody. Once the property has been put legally into a trust, all bets are off. The trust can lease out the property, if it wishes (that is, if all beneficiaries are in agreement). Since the beneficial interests in a trust is “personal property”, it wouldn’t be governed by “real property” laws.
So, as Bill said, the trust does not convey “occupancy rights”. The lease agreement between the trust and “buyer”, does. No “violation” here.
> The way I read that last sentence, it sounds like as
> long as I retain all rights to take occupancy in the
> property, even for “just cause”, only then, will I
> have not given up my rights of occupancy as the
> borrower on the loan. Since giving someone else those
> rights to occupy the property as long as they perform
> under the terms of a contract, then you would be
> subject to violating the DOS clause since you have
> given up your rights to occupy the property to a 3rd
> party. Yes or No?
At the time the trust is created, the original seller is still occupying the property, and has transferred no occupancy rights. The seller actually can retain occupancy until the trust enters into a lease agreement with someone else. Even THEN, the seller does not transfer occupancy rights.
One more small point: There is no “violation” possible when it comes to a “due on sale” clause. As Rick Vesole pointed out, the due on sale clause does not “forbid” anyone from transferring interest is a property. It only lists a “remedy” for the lender if such an event should happen. Maybe we should use the term “trigger the due on sale clause” instead of “violate” the DOS. If it doesn’t say you CAN’T do it . . . then there is no way to “violate” this.
This may seem like “nit-picking” or “symantics”, but there is a very real difference here. Connotation being one of the differences.
Take care,
Brad