Ricky,
First, remember that I am by far not a “pro” at these “Subject to” deals.
I have done my fair share, but not being an attorney, or having several dozen under my belt, I consider my experience with them to be limited.
But, I’ll do my best to answer you based on my experience.
You asked:
“Is it as simple as a “Warranty Deed” between the seller and my corporation naming a third party as the “Trustee”?”
The “Warranty Deed to Trustee” is the deed that transfers the title to the home into the trust.
This means that after this is recorded and/or filled out, the trust is the owner of the property.
The document that shows your corp is buying from the seller is the purchase and sale agreement.
The Trust is simply the vehicle for holding title.
The actual transfer of ownership is done with the “Assignment of beneficial interest in trust.”
On the Warranty deed the grantor is the seller(s) and the Grantee is the Trustee of the trust.
You then asked:
"Does it matter whether or not I do the Trust Agreement before the Warranty Deed to Trustee? "
I have my sellers sign the purchase and sale agreement first. This way, if we are not signing ALL the docs at once, I at least have the offer accepted and something in writing to show what we agreed upon.
Frankly though, usually when I have the seller ready to deal and sign off on the property, we sign all the docs at the same time.
I like to go in the order of my above post, because I explain EVERYTHING we are doing in GREAT DETAIL to the seller document by document.
This way we can both walk away from the signing feeling comfortable that everyone knows what was done.
“Subject To” Making Payments? - Posted by Mark(Tampa)
Posted by Mark(Tampa) on October 02, 2000 at 18:17:09:
A person puts her house into a Trust, then signs over her beneficial interest to me. Normally she gets a payment bill every month. How will I make the payments to her mortgage company? Can she do a change of address and have the statements sent to me each month?
Also, 2nd question: Once she puts her house into a trust, does she need to call her mortgage company to let them know that she has done so, or do you just take a chance and let them find out on their own?
Thanks in advance for this question and also to everyone who has answered my posts in the past.
Mark,
Do not EVER let the seller contact the lender themselves for any reason.
Sellers may accidentally tell the lender some info you do not want them to know. (ie: the transfer of title)
When I do the “subject to” purchase, and have the seller put the property into a land trust I also use a package of docs as the other poster below stated.
They are:
Purchase and Sale Agreement (States price as ~ loan balance and that you are buying “Subject to” the existing financing.)
Warranty Deed to Trustee
Agreement of Trust
Assignment of beneficial interest
A letter to the insurance company notifying them that the home was placed into a trust, and telling them to name the trust and its beneficiaries as they may appear as the loss payee. (You write this, the seller signs it and YOU mail it. keeping a copy for yourself.)
A C.Y.A. letter (this is a letter that the sellers sign acknowledging the fact that the loan stays in there name, but you own the home and get ALL the benefits of ownership.)
A Release of loan info form. (This form allows you, or the trustee to get loan info from the lender regarding the loan on the home.)
I also used to get a letter from the seller to send the lender that stated the home was placed into a land trust and to mail all future correspondence regarding the loan to the trustee at the trustees address.
But, on EVERY SINGLE one, the lender did not follow thru, and the statements etc STILL went to the home, with the sellers name on it.
So, now when I mail of the first payment, I simply fill out the “Change of address” part of it to have everything mailed to my address.
The lender still sends it out with the sellers name on it, but I get it here and open it.
And, depending on which insurance company I am dealing with on each property, I may get a Power of Attorney from the seller allowing me to recieve any insurance proceeds should there be a claim. This is an extra I do “just in case”.
And that is it.
After all that, the lender just sends everything to me, and I make the payments.
Sure, the checks are from me, with my name on them or the trustee, but the lenders are usually too big, and have a clerk of some sort who just enters the payments and never seems to catch that it is coming from someone other than the seller.
All the lenders care about is whether or not the payments are made on time.
Re: “Subject To” Making Payments? - Posted by Bob In Indy
Posted by Bob In Indy on October 02, 2000 at 18:45:49:
When I get the deed from the seller, I have a package of 7 or 8 documents that we execute. One of them is a notice to the mortgage/insurance company that tells them that my company will be making the payments in the future. The seller signs this and includes their social sec. no and their birthdate. I call the lender and I call the insurance company. I made the mistake once of telling the seller to call the lender and tell them that a property manager would be making the payment. Boy was that a mistake. I make the call and it is usually to the customer service section of the lender. Sometimes they want a fax copy of my agreement, but never have I had even the slightest problem getting them to put my company’s name on the coupon book and send it to me. My experience is that the seller wants to be relieved of making any payments and I must have some credibility since they don’t even question that I will be making the mortgage and insurance payments. In summary, get a document signed by the seller authorizing a property manager (you and your company) to make all the payments. You make all the actual arrangements by phone and fax with the lender.
Re: “Subject To” Making Payments? - Posted by henryIL
Posted by henryIL on September 14, 2002 at 18:32:46:
Hi Jim, im reading im reading this old post of yours on sub2. What form is the agreement of trust. I thought you just needed the warranty deed into trust…thanx in advance .
by the way im doing my first sub2(first deal) finally…any way I did a purchase agreement so far and took it in my name beacause I dont have an LLC yet. any suggestions. thanx
I’m getting alot of motivated sellers willing to do “subject to”, and I understand everthing except “Warranty Deed to Trustee”. Is it as simple as a “Warranty Deed” between the seller and my corporation naming a third party as the “Trustee”?
In the above post, is this the correct order of events?
Does it matter whether or not I do the Trust Agreement before the Warranty Deed to Trustee? This is where I get confused. Once I get this clear in my mind I feel speak to my sellers with a great deal more confidence.
Posted by Marty Weisberg on October 06, 2000 at 12:54:42:
Ricky,
I am not an attorney but it makes sense that the Trust Agreement MUST be signed before the Warranty Deed to Trustee. If you do not have a trust agreement in place then how can you have a deed placing the property in a non-existing trust. You can do it at the same time but make sure you have the trust done and notarized before placing the property into the trust.