Hewww! I didn’t realize that I had been holding my breath so long. Thanks for reminding me to let it go!
Geez, if you are going to go after the BS spouters on this board, you are going to keep pretty busy, wouldn’t you say? Most of them don’t seem to “liars”, they just don’t know that they don’t know. (What is the difference between a software developer and a used car salesman? The used car salesman knows that he is lying!)
I have done a couple of NARS Equity Holding Trust deals, both successful (one completed and one in process). The concept and the supporting documents do attempt to deal with some of the risks involved in CRE: due-on-sale violations, creation of equitable interests when none are intended, providing for seller recourse if the buyer cannot perform, etc. You may not feel that these issues warrant the extra complications involved, but I sometimes do.
It seems to be one of the few ways to take on a no-equity deal safely and still make some money from it. Extra value is created because of the tax laws that is not available in lease-options for example.
So, while I agree with you about the BS approach, I do think the underlying mechanism merits consideration.
Re: LAND TRUSTS-SUBJECT-TO - Posted by Brad Crouch
Posted by Brad Crouch on June 22, 2006 at 03:08:41:
Randy,
When you take a property “Subject To”, the idea is that you help the
seller create a trust using a trustee of YOUR choosing. The day after
the title is recorded in the trustee’s name, the seller assigns the
beneficial interest in that trust to you, or to your LLC (if you have one).
If you leave the hazard insurance in place (even though the policy is no
longer valid), and obtain a new insurance policy, the company that
insures the existing policy won’t be reporting to the lender that a “new
buyer” has taken over the property. They can only report that the
property is now in a trust. The lender views this as an estate planning
move, as it happens frequently.
By the way, the loss payee on the new policy should be the trustee, the
trust and the beneficiary(s), ATIMA (as their interests may appear).
If you’re using an LLC (multi member) as the beneficiary, you should be
pretty much bullet proof.
In the event you choose to use a lease option as an exit strategy, use
two separate documents (a lease and an option) and don’t use a lease
term of three years or more (use instead 2 years, 11 months and 29
days).
Lets be clear that I am not an attorney . . . so do some due diligence.
Re: LAND TRUSTS-SUBJECT-TO - Posted by LeasePurchase
Posted by LeasePurchase on June 21, 2006 at 17:55:01:
Taking a property Subject-To using a properly contructed Land Trust is a great method. However, the Seller/Settlor does not assign the trust to you.
The Trust is established by vesting the properties title to the Trustee not the Trust, with the Seller/Settlor as the only beneficiary. The Seller then assigns you a beneficial interest in his/her trust. The Law requires that the Seller remain a beneficary of the Trust until it expires or the beneficiaries direct the Trustee to sell the property and distribute the proceeds of the Trust according to your Beneficiary Agreement.
You said:
“The Law requires that the Seller remain a beneficary of the Trust until it expires or the beneficiaries direct the Trustee to sell the property and distribute the proceeds of the Trust according to your Beneficiary Agreement.”
PLEASE, when you reference, ‘the law’, can you direct me, and others to which law EXACTLY you are referring?
Otherwise, keep your pactrust/whateveritscallednow thingee, and well, just stop.
The FALSE info spread by folks talking about their cult online really has gotten on my nerves over the years.
Enough so that now, I cannot sit idle and allow it to go unchallenged.
So, which law might that be?
Don’t even try to BS me either…garn has nothing in it saying this.
Not quite right. A land trust does not require that the seller remain a beneficiary. The seller could deed the property directly into a landtrust in which the buyer is the only beneficiary. Or the seller could deed the property into a landtrust in which the seller is, originally, the only beneficiary, and the seller/beneficiary can assign part of or all of their beneficial interest to other parties, etc.
The requirement for the seller remaining a beneficiary comes from the Garn/St. Germain bill that provides an exception to the due-on-sale clause when the seller/borrower is and remains a beneficiary of the trust. In this case the lender, if subject to the federal law, cannot call the loan due as a result of the transfer into the trust.
Geez Dude, cool your jets. Who said anything about PAC? This has nothing to do with it but if you insist on advertizing for NARS, go right ahead. Your the dip who brought it up, dummy.
Do you mean to tell me you have read Garn-St.Germain and you don’t see where it reads that the they must remain a beneficiary and their trust trust itself cannot relate to a tranfer of occupancy rights?
Then here it is…
Sec. 341. // 12 USC 1701j-3. // (a) For the purpose of this section–,
(8) a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; or
Or are you telling me that GSG isn’t a Federal Law. The law is there to prevent lenders from calling their notes due for the owner placing their property into their own RLT and naming remainder agents, (that’s co-beneficiaries for you) and as long as the owner remains one of those beneficiaries.
I have a Revocable Living Trust, do you? And the Trustee of my RLT holds the title for me and my beneficiaries.
Again, this has nothing to do with a NARS PACTrust or a Bill Bronchick Trust or whatever Guru you follow.
Jim, breathe! Now take another breath! Relax, the pactrust/whateritscallednow thingee won’t hurt you!
LeasePurchase usually goes over the top on this topic. However, the PacTrust (NARS Equity Holding Trust, etc.) is a legitimate tool in some circumstances. Its just a land trust with multiple beneficiaries with an agreement between the beneficiaries on how the property and money are handled. Then the trust triple-net leases the property to one of the beneficiaries. That’s all it is. No magic, no sleight of hand.
Of course a major part of the value of the PacTrust/EHTrust is the specific documents used to handle all of the details and dance around the many laws and regulations that surround real estate investing, but that’s true of any of our CRE approaches, right?
So just smile when the advocates show up and continue to do things the way you always have. If you want to investigate another way of handling owner finance safely, then check out the NARS Equity Holding Trust. But you can leave home without it.
Re: LAND TRUSTS-SUBJECT-TO - Posted by Brad Crouch
Posted by Brad Crouch on June 23, 2006 at 03:04:43:
Larry,
"The requirement for the seller remaining a beneficiary comes from the
Garn/St. Germain bill . . . "
No such “requirement” exists! Neither in the Garn St. Germain act, nor
any other law.
The “requirement” you mention can only be found within the system
you seem to be trying to shove down everybody’s throat, on this board.
But it is NOT a law! Please cite the law and furnish the verbage, or
don’t respond at all.
I don’t understand why you NARS people insist on supplying
misinformation. Don’t you understand that this only undermines your
efforts at recruitment? And builds even more hostility towards your
“system”?
dude, I know what the pactrust and its successors are, how they work, etc.
Might be a tool for someone to use, somewhere, some time.
However, when the advocates come on here, and other places, spouting things like ‘the law’, basically, they are pushing a line of BS.
I can, have and will leave home without it, as you say, but by no means will I sit here and allow them to attempt to snag folks into ‘the program’, by not being honest about it.
That’s my beef.
I cannot stand liars, never have been able to, so when I see someone blatantly doing so, I call them on it, in public.
Breath? Okay, no its your turn, exhale, you’ve been holding it too long.
You got me! I wasn’t clear enough in my previous post. There is no legal requirement that the seller remain a beneficiary in a land trust. The requirement I was referring to was the one that LeasePurchase alluded to. But that is a requirement only if one wants to take advantage of the exemption from the due-on-sale clauses in most mortgages provided by the Garn/St. Germain law (see FDIRA 1982/12USC1701-j-3). If you would like, I will look it up and quote it to you verbatim, but I figure that you can do it yourself if you are truly interested in the language.
Now Brad, I am not shoving anything down anyone’s throat. But, as usual, you seem to react unduly harshly to anyone who supports the NARS Equity Holding Trust. If you want to go one-on-one again, let me know. I can dish out the insults as easily as you can. But it seems a childish waste of time.
