I purchased a house in Peachtree City Ga by a land contract. The seller sold the house to me in a “Living Trust”. I recorded the land contract at the county court house. I will have a balloon payment within 3 1/2 yrs.
I will be leasing the property for a year very soon. All paperwork has been done and $$$ recieved.
If the owners passed away would the living trust over rule the land contract?
My plan is to keep the house leased and then sell it before the balloon payment will be due…since this will be my 1st completed deal like this…am I missing anything or any advice is greatly appreciated. I think it will be a great deal if I did it correctly…geez I hope I did :rolleyes
Hi,
I am sorry to tell you but a living trust or family living trust as it's best known is non transferable as a family living trust is tied to the person or persons (Husband & Wife) who create it, it no longer exists as a transferable vehicle once removed from the creating party or trustee upon ones death!
The property has to be removed from the trust to set up and seller sign interests to buyer!
Yes, because the family living trust can not be contractually obligated to any agreement, it only houses existing agreements for the person or persons it was designed to protect and distribute the estate upon death!
GR
The land contract is attached to the land rather than the owners. This means that if the original owners die, the estate or heirs then becomes the party of the land contract. From my research, you can sell property that is part of a living trust as long as the trust does not have any restrictions.
You need to go over the land contract and the living trust with a fine toothed comb to make sure there are no restrictions prohibiting a sale.
So in simple terms it means that the land trust is just an agreement between the living trust and should they die the agreement would be invalid and terminated?
That would mean if I receive a lease on the property upon the living trust death…the lease would be invalid?
If thats the case the deal may not be that sweet…or may be better for me to cash out on the property?
Thanks for your advice…I know you have a lot of experience Gold River…I have read many of your posts and really enjoy them…hmmm gotta figure out what I am gonna do :bobble
Hi,
A land trust is different than a family living trust. Each type of trust has the Settlor, The Trustee and the Beneficiary.
A land trust is a type of stand alone trust while a family living trust once separated from the Settlor no longer exists.
If the seller sold you a home on a land contract then they would remove the property from their family living trust, sign all the documents and then place their ownership back inside their family living trust under the new terms and conditions of their new agreement.
Now you actually mention living trust and the difference between a living trust and a family living trust is that a single person can file a living trust while usually a husband and wife create a family living trust.
So if I understand your seller placed this property in a Land Trust and sold it to you as a contract for deed with a balloon payment and if it were done correctly then your agreement will stand as your sellers Heirs only receive the benefit of this contract and have no further right to the property provided you perform as agreed!
So I think your in good shape.
GR
Since you mention living trust, not land trust, I assume that the property was held in a “revocable” (living) trust and the grantor was also the trustee. Let’s also further assume that the language of the trust gives the trustee the power to sell, mortgage, or assign the property. If so, then the property title probably reads “John Q. Public, trustee John Q Public Revocable Trust” or something quite similar.
Perhaps the contract for deed (land contract) you mention was created as a contract between youself as the buyer and “John Q Public, trustee John Q Public Revocable Trust” as the seller. If this is the case, then the death of John Q Public just makes the trust irrevocable but does not dissolve the trust. The trust now has to get its own tax ID, file tax returns in its own right, and the substitute trustee (on behalf of the trust) is still bound by the terms and conditions of the land contract until the contract is satisfied.
Just how I see it. Your concerns should really be answered by your own estate/probate attorney after review of all the relevant documents involved.