Substitution of Collateral - Posted by Sandra

Posted by colvegas on January 21, 2006 at 22:46:37:

I would think you would both sign the form. A nice way to secure your lenders interest and protect both of you regarding your property is to vest your property into a land trust and then assigning a % of beneficial interest to your private lender equal to the amount of the lien on the property. AS to the substitution of collateral you can substitute your private lender as a beneficiary to whichever property you are using to do this. YOu lender upon realizing the trust is a legal entitly that is legally structured properly will actually better secure his interest in the trust that owns the property you both as beneficiaries would control it. YOu also avoid a due on sale trigger under the Garn St germain act of 1982.
Doing it through a trust takes the lien out of the picture which acutally clouds your title. since liens can not attach in the land trust.If it is a asset based lien or a lien secured by the propertybe careful since if you do not pay or have problems he can foreclose and in some cases take the whole enchilada… I had a lien on a property to pay a hard money and if I did not pay the private money lender could foreclose and take my whole house!!!
Let me know how i can assist you my email is

Substitution of Collateral - Posted by Sandra

Posted by Sandra on January 18, 2006 at 12:41:33:

I just posted this on the financial forum but this is really the right spot.

I have a private lender that holds a lien on a property I am selling. I need him to substitute a new property for that one. I have the form but am confused about who signs it. Since it releases the lien on the original property I am sure he has to sign it, since it also places a lien on a new piece of property I would think I also have to sign it.

Don’t want to get it wrong, do we both sign this form?