Posted by Natalie on September 21, 2010 at 11:44:34:
I see… unfortunately current lender is not willing to do that, it was already discussed. They were only willing to carry 2nd if it is recorded.
Multi unti owner financed. Loan matured. - Posted by Natalie
Posted by Natalie on September 16, 2010 at 15:15:28:
I own a multi unit building which is 100% owner financed. Loan matured in May of this year and we are still current on the payments.
We were trying to get it re-financed and loan was currently approved but only for 65% of what we currently owe.
Owners agreed to carry the 2nd, but 1st to be is not allowing a 2nd and they’re actually very strict about it. We understand that after we close they would check every couple of months if a 2nd was attached and if so will call the loan + will demand huge penalty.
In any case, we would like to keep this building but do not know what to do next, current lender does not want to extend the loan or carry unsecured 2nd.
What are our options? Do we keep paying and remain in limbo or do we stop payments and go into foreclosure?
Re: Multi unti owner financed. Loan matured. - Posted by Colin Bochicchio
Posted by Colin Bochicchio on October 10, 2010 at 22:04:23:
Natalie,
John is absolutely right on and very creative in how one can use land trust. If you still had a lien on the property (commercial)then Garn St Germain does NOT cover you but with the lien satisfied you can now title vest to your designated trustee w/o notifying the bank. Then as John M mentioned just sell a % of beneficial interest to an investor or owner. It would NOT be recorded due to it being a silent assignment of beneficial interest.
Depending on your arrangement “O” can take an assignment for a cash investment typically par value on whatever you negotiate and depending on the % of beneficial interest assignment…they would hold that interest as collateral in the deal…
You are legal (not legal advice intended) and flexible and create a win/win for all parties in the transaction.
Not only are you providing a degree of asset protection especially if a company hold the beneficial interest you created a viable exit strategy and solution to you acquiring capital when conventional lending as usual proves unreliable
Re: Multi unti owner financed. Loan matured. - Posted by Mark (SDCA)
Posted by Mark (SDCA) on September 21, 2010 at 12:14:28:
Why would you stop paying if you can make them? I see no upside to that.
I would communicate with the owners. I expect they already know what the financing markets are like.
The ball is in their court. If they REALLY want the property back then make them call the loan and foreclose on it.
Re: Multi unti owner financed. Loan matured. - Posted by Jack
Posted by Jack on September 17, 2010 at 17:38:11:
Knowing how many units in the multi unit would help. Regardless, I think you are giving up on the financing too quickly. Is this really the only Bank in your area that will lend on this property? Maybe a different lender will be ok with a 2nd DOT.
Lastly, it is ‘seller financed’ not ‘owner financed’.
Trusting Butler and Bronchik ? - Posted by John Merchant
Posted by John Merchant on September 17, 2010 at 11:27:50:
Just a thought…since you own it now you’d have the right to deed it into a trust*, then sell that trust or portion thereof to O, w/o that’s being recorded and that 2d transaction staying strictly between you and the O.
This site is a gold mine of info on uses of a trust for legal and lawful solution to this kind of situation.
David Butler and Wm Bronchik have written extensively about trusts on this site.
I have used and seen used, pvt escrows with either a RE knowledgeable lawyer or pvt, reputable escrow co. (definitely NOT one of the big, national Title/Escrow Cos as they take their orders from above) to work through involved arrangements like this.
Even if you ended up paying an atty’s fee of several thousand $$$ it might be the most economical solution for you.
By the way, if your present loan has “matured” doesn’t that mean you’re currently delinquent?
*Law gives the right to convey into your own trust w/o that’s giving the lender any right to “call” the note.
Re: Multi unti owner financed. Loan matured. - Posted by Natalie
Posted by Natalie on October 11, 2010 at 10:57:56:
Thank you Colin for your reply, HOWEVER, again as I have explained previously current lender (seller who financed this property) in this situation is NOT ok with just a % of beneficial interest that is not recorded.
They want 2nd to be a recorded lien on the property, period. They are not negotiable on that.
Re: Multi unti owner financed. Loan matured. - Posted by Natalie
Posted by Natalie on September 20, 2010 at 16:00:08:
It is 6 unit, and it has taken us almost a year to get this loan approved and we have tried other lenders.
Don’t really have time at this point as the loan matured 3 months ago.
Re: Trusting Butler and Bronchik ? - Posted by Natalie
Posted by Natalie on September 20, 2010 at 16:02:59:
I am not sure I follow your logic.
2nd would be recorded and would come up when you do a title search. This property is already in a trust… it doesn’t matter who owns it 1st doesn’t allow 2nd to be recorded on the property.
Re: Multi unti owner financed. Loan matured. - Posted by Jack
Posted by Jack on September 23, 2010 at 21:57:57:
Yes, getting loans on 5+ units is considered commercial lending, and very difficult currently. Well there is always Chapter 13 Bankruptcy, in such situations the Courts often force the creditors to extend the existing loans, and sometimes even force reduced interest rates.
I did NOT say record 2d - Posted by John Merchant
Posted by John Merchant on September 20, 2010 at 18:19:06:
If no 2d recorded (if what you convey is interest in the trust)then bank wouldn’t know, would it?
So far as 1st lender is concerned, the trust owner has done nothing as it’s conveyance would stay strictly within the trust, w no recording
Re: I did NOT say record 2d - Posted by Natalie
Posted by Natalie on September 21, 2010 at 23:40:45:
I see… unfortunately current lender is not willing to do that, it was already discussed. They were only willing to carry 2nd if it is recorded.