Due on Sale Clause

Lets say I buy a couple of rental houses in my name and then I want to transfer them into my LLC. I was told this initiate the Due on Sale Clause. What say you?

Don’t do it.
Put it in a trust and then on a separate unrecorded document, assign the beneficial rights over to your LLC. :smiley:

The John Doe Family Trust
Make the trustee some one you trust and get limited power of attorney from them.

I hope this helps

Howdy Horsetrader:

Banks are not looking for ways to foreclose on property. Never have and never will. It is a losing deal for them to foreclose. IMHO do whatever you want.

Ted is right - thinking here by many on this site is banks do not enforce due on sale unless their hand is forced. In the coming days they are going to be up to thier eyebrows in foreclosures so won’t be worrying about due on sales. If you transfer to an LLC per a land trust, the LLC is the beneficiary, which should retain control of the property. You as an owner/manager/etc. would not need to get a POA, IMHO.

I agree with Indy Bruce with one exception, the selection of a Trustee. While almost anyone can be named the trustee of a land trust, there are definite benefits to use a Corporate Trustee as the trustee of your land trust. Appointing a trustee other than a corporation would allow the property to fall into the trustee’s probate and other legal problems: but a corporate trustee (in virtually all states) MUST be a trust company only (bank and trust, title and trust, XYZ trust company) … or a non-profit corporation acting only for the benefit of its certified members.

As rare as it is for the DOS to get called, I think people are way too worried about it. I will know it’s there when I get started, but as long as I do my due dilligence, the DOS is not going to be a major thing to me in most cases.

I think I have a better chance of getting run over by a bus than seeing a DOS called. (YES, THIS IS A JOKE) ;D

watch out for that bus bobo :o ;D

Actually, Bobo, on any given day in Jersey you’ve got about a 50/50 chance of getting hit!


I guess I should have been more specific. I mean getting hit by a bus sitting here in my office. ;D

And holy cow @ New Jersey, I used to drive a semi, and I always wished it were a tank when going there.

I prefer my way to handle a trustee.
I use a Trustee that is out of state.
If anyone ever tries to go after my trustee they would not look in my state because my trustee never lived here.
I do not need to have my trustee here because I have limited power of attorney. ;D At any time I can fire one trustee and hire a new trustee 8) If you visit your trustee For a trustee meeting once or twice a year. Of course you can write it off. :dance2: If it is an out of state friend. Two birds, one stone. :beer:
I only pay my trustee $12.00 a year.


My mother’s second husband put his house in trust for her and then passed away. The deed is now in her name but the mortgage is in his. Whenever she calls for info on the mortgage they tell her they can only speak to him. So now she logs in online. 8 years and they haven’t called in the loan.

One thing not mentioned here is… if mortgage rates go up, banks might not feel compelled to extend the older lower rates to the deed.

How about a poll on this? Has anyone ever had a mortgage called in for due on sale? I haven’t heard of any.

Great information and confirmed what I believed all along. I just read Lucier’s book and the whole time thought he made way to big of a deal about the DOS clause. Thanks again everybody.

Therein lies the difference, Bruce. If your trustee is an individual and has a creditor judgment filed against him or dies, you are in trouble. They will find all property your trustee owns, whether within your state or not. If you are saying that title is held in YOUR name, not your trustee’s, then you do your land trusts in a totally different way and you have much more legal exposure. No wonder you find it necessary to appoint an individual from out of state who is paid only $12.

In the NARS trust, the seller deeds the property to his Trustee, a non-profit corporation that is insured and bonded who has legal and equitable title. I never go on title and never have legal responsiblity for anything. Using a non-profit corporation that is insured and bonded guarantees I will have no trouble down the road.

We exclusively use Equity Holding Corporation, which with the benefit of “unlimited life” was founded and established exactly for this purpose. The Corporation is Bonded against fraud and dishonesty. Equity Holding Corporation serves as Trustee for hundreds of Trusts Nationwide.

Thomas K. Standen, President and CEO of Equity Holding Corporation is one of the founding Directors of the California Trust Deed Brokers Association. As past Vice President of this prestigious organization, he also sat on the Board of Directors as Legislative Co-Chairman, representing the organization at an advocacy level at the State Capital in Sacramento, California. In addition to his position with Equity Holding Corporation he is the President, organizer and founder of Equity Management Services, California Equity Corporation and North American Loan Servicing. He also is the Managing Member of California Equity Investors LLC, a Private Mortgage Pool and Managing Member of Mariposa Financial Limited.

Standen attended the University of California at San Diego and is a graduate of the FBI National Academy. He holds a lifetime teaching credential and has a background of over 20 years in Law Enforcement both in Command and Administrative Positions, retiring in 1979 as an Area Commander.

His experience and integrity have been confirmed by the Court as an appointed Referee and Receiver by the Superior Court. Tom is a man of vision with enormous entrepreneurial skill and ability. He has been involved in the Real Estate and Mortgage Industry since 1976.

You may feel comfortable appointing any individual or friend as trustee, but in my opinion, you just don’t have the protection we have using Tom Standen and EHC.


You said “The Corporation is Bonded against fraud and dishonesty.” how much is the bond for?

John $Cash$ Locke

Hi John,

I will be happy to find out for you. Knowing Tom Standen and his financial and law enforcement background and the seriousness with which he carries out his duties, I am certain it is a sufficient amount. Equity Holding Corporation is custodian of all original documents including Grant and Warranty Deeds, Assignments and Occupancy Agreements.

Equity Holding Corporations collectively hold (or have held) title to properties totaling more than $1,000,000,000 (that’s one billion) in value. It holds title to land trust real estate throughout the United States.

This is his number if you would like to ask him yourself: (209) 966-3445 as I will be gone for much of this week. You may have other questions as well. Hope this helps.

Da Wiz

With regards to a trustee, I would rather use a trusted friend, family member, or even spend a few hundred to use an attorney, then to use the entity you use. The real problem is I think paying 1% of the value of the house, PLUS the $40 per month that I saw on the site is way too much money for what you get. I don’t see a reason good enough to spend that much money to set up the NARS trust. If it was only in the hundreds, and I could set it up myself (after the first one), that might be different. There are many land trust courses that cost a few hundred dollars, and you can use the paperwork over and over. If I understand right, the NARS has a patent? or trademark? or something that does not allow people to set them up themselves. If I am wrong on this last part, feel free to correct me…but that is the way I understood it. The cost is the main reason I wouldn’t consider using it, when there are other ways that work and are most cost effective.

who would perform fraudulantly and dishonestly to justify a bond?


What kind of protection do you need that can justify giving away 1% of the MAV, plus $40 per month? That is the one thing I don’t get…that is a lot of money to pay for a trustee. If I am missing something, I would like to know what it is.

yeah that would be my other part of the question. just y so much protection and from whom? or just becuz of a fear the DOSC will be called?


That’s OK I will wait for your answer, because I am very familiar with bonds as several business I owned required a person to comply with the various state licensing bureau’s by posting a bond.

For example I held a one million dollar bond for my bail bond company, so I figure that anyone dealing in one billion dollars worth of properties would have a pretty hefty bond to cover fraud and dishonesty, so everyone gets paid and this could happen no matter a persons credentials that is why they have bonds.

“Surety bonds are also used, for example, to secure the proper performance of fiduciary duties by persons in positions of private or public trust.”

Anyway I will be waiting for an answer.

John $Cash$ Locke