My question would be is, are you getting the original seller to agree to keep the existing mortgage in place?
The original owner/seller would have to agree to that and also understand they are the Grantor that starts the trust and names himself as a beneficiary, along with you (investor beneficiary) and the tenant buyer (buyer beneficiary). Of course you being the investor expert, you can help in creating the trust or pay a competent attorney to do so. Or use the services of Bill Gatten’s http://Landtrust.net
Than it sounds like you would name yourself (investor) as trustee, that controls the trust’s direction. (Beneficiaries directs trustee–> Trustee takes care of the property).
Since you are listed as a beneficiary, you’d be a beneficiary/trustee.
It sounds like that would be a go, in what you described. I just wouldn’t put your PERSONAL name under the trustee line, an LLC would be better, which could be one you own or better yet, an outside LLC Firm specializing in servicing Land Trusts.
You wouldn’t have to explain necessarily to the bank about anything. They simply would get a notice from the closing stating that the title is now vested in a Revocable Land Trust, created by the original owners named on the loan and the named Trustee will be expecting the bill from now on and paying all the monthly obligations on the loan and home. The bank would hardly bat an eye at this. Happens all the time for estate planning.
Now this Land Trust method probably works better for at least a 2-3 year holding period, of “leasing-to-own” this property to the tenant buyer. I don’t know how it applies to a double-closing. Anyone have an example??
In fact you should check into the minimum time a Land Trust should be set up for. Again Landtrust.net can help you with this or a competent real estate attorney.
P.S. I just wanted to say, that if you expect to do any of the contracts and set up for an LLC and/or a Trust for nothing out of pocket, forget it. It takes money to do this business, so be prepared to do the right thing, using a company that does it professionally. Setting up an LLC correctly is roughly $199-299 (prices I’ve seen online anyway) and setting up a Trust correctly can be as much as 1% of the sales price of the loan and could be less. There’s also the monthly Trustee’s Fee to manage the Land Trust.
But doing it right, paying the fees, the first time around, will save you TONS of HEADACHES, you’ll learn EXACTLY the process and once of you’ve done a lot through the service, perhaps you may wish to do it on your own. It also looks “official” when the Trustee named in the trust, is a different company, with no relation to you, and this OTHER COMPANY, LLC acts as trustee, still under beneficiaries’ (yours’) direction and control. No worries mate! :biggrin