Gary da wiz, I think you may have a problem


It is quite obvious that not only do the newbies read these boards, but it appears that our lawmakers do also.

I would have to guess that one of the reasons for the following change to the Code of Federal Regulations may have come from your rantings about using a trust for everything including curing the common cold.

Here is what I am talking about:

[Code of Federal Regulations]
[Title 12, Volume 5]
[Revised as of January 1, 2006]

(vi) A transfer into an inter vivos trust in which the borrower is
and remains the beneficiary and occupant of the property
, unless, as a
condition precedent to such transfer, the borrower refuses to provide
the lender with reasonable means acceptable to the lender by which the
lender will be assured of timely notice of any subsequent transfer of
the beneficial interest or change in occupancy.

As far as any change in the beneficiary of the trust, the word “A” has been changed to “THE” and the owner MUST remain the occupant to not violate the DOS.
And this is FEDERAL.

I guess this answers those questions I had, that you wouldn’t answer on this thread here:;action=display;threadid=11612

So if the seller MUST remain the occupant of the house and “THE” beneficiary, it looks like your back pocket transfer loophole has been closed. So please explain to me the reason and for using your NARS trust or any other kind of trust to hold a property in; because if the seller leaves or you change the beneficiary, now you have violated the DOS and I know how worried YOU are about that.

Nice try but no cigar, BooBoo. Your posts are regularly inaccurate and intentionally so. If you knew what you were saying you would be dangerous. Do you even know what the Code of Federal Regulations are? What you are quoting is NOT THE LAW. This is OLD NEWS and has been addressed repeatedly.

Title 12 of the CFR is specifically NOT the law and HAS NEVER BEEN enacted as such, or even proposed to be law. Understand, Booboo? Title 1 of the CFR will show any reader which codes are law and which are not, and Title 12 itself is NOT.

And do not let any uninformed attorney or nay-sayer (or self-appointed and self-aggrandized wing-nut) ever tell you that the CFR is law in every title. Some titles are, and some are not: and Title 12 is not, and would always be subordinate to Title 12 of the U.S. Code (12USC 1701j3, etal).

Their article is “A” not “THE” and any prohibition against leasing the property would fly in the face of 1701j3 (ok to lease for up to 3 years, and without a lease option).

Period! Land trusts are and will be exempt from the DOSC. So your whole argument fell apart again and again you are spouting misinformation. The CFR is simply a summary of the law and the section to which you refer has been misquoted. The “and occupant” part has been added but is not included in the actual law. Remember this is only some law clerk’s summary of the law. Garn-St. Germain continues to rule, allows banks to invoke the DOSC and exempts land trusts from said action and always will.

Da Wiz

I never said this was LAW.

If you reread my post, twice it says FEDERAL REGULATION and by its title is for Banks or are you now telling us that the lending industry doesn’t have to follow regulations??

This regulation spell out how they are to interpret the LAW and by this interpretation they have the right to call the loan on a property placed into a trust where there has been a transfer just like they can, if they so desire, if the property was not placed in a trust.

The whole key to my arguments is this transfer of the beneficial interest and these regulations support my argument.

Placing a property in a Land Trusts is exempt from the DOSC, but the transfer of the seller’s interest or occupancy is NOT EXEMPT.

WRONG. You are desperate. The letting (leasing-out) of the property to a co-beneficiary of the trust is not a compromise of the lender’s security interest under the US Code §1701-j-3 (see Garn-St. Germain/ FDIRA 1982).

Placement of real-estate into a living trust (i.e., a land trust) in which the borrower requests no release of liability and retains full directive powers [as trustee or as “directing-beneficiary”] does not trigger a “Due on Sale Clause” action, providing that:

A) the trust is revocable by the borrower;

B) the trust is in the borrower’s name;

C) the borrower is and remains a beneficiary, and

D) the TRUST ITSELF conveys no rights of occupancy.

• Pub. “Using California Trusts, Planning, Implementing Administering and Terminating,” Cont. Ed. of the Bar, CA. ©1991 Regents - U of Ca.
• Barnet Resnick, “Is There Such a Thing as a California land trust?” LA Bar Bul. 4/73, pp 216-228 Bentley Mooney Jr., Esq., Preserving your Wealth [68-112];
• H. Kenoe on land trusts, etc
• La Sala v. Am. S&L, 5 Cal. 3d 864, 489 P.2d 1113, Cal.App. 91 Cal Rptr. 238; 97 Cal. Rptr. 849 (LA No. 29851 Supreme Ct. of CA)
• Coast Bank v. Minderhout, 61 Cal. 2d 311, 317 [38 Cal. Rptr. 505, 392 P.2d 265] 12 USCA §1701-j-3

Booboo, you have been desperately trying to change Federal law because every time you do a subject to without a land trust you are violating the DOSC. You can say these “regulations” support your argument, yet these “regulations” are not the law and in fact, the one to which you refer is a misinterpretation of the codification of the actual law. Your argument as usual lacks any merit and is getting old. I ran it by Bill Gatten who laughed hysterically. He has two very recent letters in his file from Countrywide and Washington Mutual who tried to invoke the DOSC on members who had acquired properties “subject to” within land trusts and leased to tenant/beneficiaries. In both cases the banks were stoppped dead in their tracks – period.

In order for this law (Garn-St. Germain Act of 1982) to be amended or changed it would take an act of Congress. Land trusts are exempt from the DOSC – get over it.

Da Wiz

Desperate NO…Concerned about getting the truth out YES

Since I see that trusts do NOT give me the protection you have been leading people to believe and I don’t have the concerns about the DOS that you do, I’ll not bother with the extra wasted paperwork and expense of a trust.

I will always believe that by doing a back-pocket transfer of the beneficial interest like you do is loan fraud because you are trying to hide this transfer overtly from the lender by doing it hidden inside the trust and not in plain public view.

And I believe this FEDERAL REGULATION was enacted to give the lenders something to stop this fraud, yet keep the Garn-St. Germain intact.

You have posted 17 times – every post is anti-trusts. You have been exposed as a shill with zero credibility. You have never posted anything about anything you may know about real estate. You are somebody’s boy. Have a nice day.

Da Wiz

So Gary,

You think the CFRs mean nothing.

Here is a partial quote and link to its source so you can see for yourself how my arguments are absolutely correct.

The United States Code of Federal Regulations (CFR) is the codification of the general and permanent rules and regulations published in the Federal Register by the executive departments and agencies of the Federal Government.

The CFR exists because the United States Congress often grants broad authority to executive branch agencies to interpret the statutes in the United States Code which the agencies are entrusted with carrying out. This is either because Congress is too busy or congested to micromanage the jurisdiction of those agencies by writing statutes that cover every possible detail, or Congress feels that the technical specialists at the agency are best equipped to develop detailed applications of statutes to particular fact patterns as they arise.

Under the Administrative Procedure Act, the agencies are permitted to promulgate detailed rules and regulations through a public “rulemaking” process where the public is allowed to comment. After a period of time, the rules and regulations are usually published in the Federal Register and later incorporated into the CFR. The regulations are then treated by the courts as effective as statutory law, as long as they are a reasonable interpretation of the underlying statutes. This “reasonable interpretation” test or Chevron doctrine was articulated by the U.S. Supreme Court in a unanimous decision (6 voting, 3 recused) involving a challenge to new Clean Air Act regulations promulgated by the Reagan administration in 1981. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984).

Hello! McFly! Is anybody home?

Title 12 of the CFR is specifically NOT the law and HAS NEVER BEEN enacted as such, or even proposed to be law. Title 1 of the CFR will show any reader which codes are law and which are not, AND TITLE 12 ITSELF IS NOT. AGAIN, TITLE 12 IS NOT LAW.

Many know-nothings such as yourself will tell you that the CFR is law in every title. Some titles are, and some are not: and Title 12 is not, and would always be subordinate to Title 12 of the U.S. Code (12USC 1701j3, etal).

Their article is “A” not “THE” and any prohibition against leasing the property would fly in the face of 1701j3 (ok to lease for up to 3 years, and without a lease option).

Da Wiz

I realize that frustration is setting in because Federal Regulations support my arguments, but please can we keep this business like with out all the name-calling??

The federal regulation that you say was enacted was the right for these guys to print or codify the law – not any law in and of itself.

The Code of Federal Regulations (CFR) is the codification of the general and permanent rules published in the Federal Register by the executive departments and agencies of the Federal Government. It is divided into 50 titles that represent broad areas subject to Federal regulation. Each volume of the CFR is updated once each calendar year and is issued on a quarterly basis.


It is a book, an interpretation – a guide – NOT THE LAW. In this case, it does not meet the “reasonable interpretation” criteria in that any prohibition against leasing the property would fly in the face of 1701j3 (ok to lease for up to 3 years, and without a lease option) - Garn-St.Germain.

The fact that Bill has two recent letters from lenders who could not invoke the DOSC is proof enough. I have better things to do than educate the uneducated or the unwilling.

Da Wiz

take it outside! haha

take it outside! haha

It’s actually a very good debate…except the frustration, but that’s understandable.


Ok, So you transfer the title into a land trust. No big deal, your protected on the surface. Obviously if you want to acquire the property you must be a beneficiary of some degree. However, to be “fully protected” it sounds like the owner must also be a co-beneficiary and remain the trustee (or I presume at least a co-trustee).

What happens 3-5 years down the road when the agreed upon time to sell the property comes and the trustee has decided to modify the trust and has removed you as the beneficiary or decides that he deserves more and doesn’t want to live up to the original bargain?

What, you sue him for not performing his duties as a trustee and following the directions of the trust? That is fine, but what if the frustration just isn’t worth it? There has to be better ways to do the investing. The whole point of this trust is to avoid the DOSC. Sounds like you would just be better off taking subject-to or whatever the deal is and “hope” the lender doesn’t exercise the DOSC. And just in case they do have an exit strategy.

Always have a plan B. A plan C is usefull just in case Plan B doesn’t work out either.


You don’t understand trusts. The scenarios you described CAN’T HAPPEN. The seller remains a 10% co-beneficiary of the trust, NEVER A TRUSTEE. If a trustee was also a beneficiary it would nullify the trust due to the Doctrine of Mergers.

The Trustee cannot modify the trust, nor can he do anything without the written approval of the beneficiary(S). This is a beneficiary-directed trust. You need to understand Trustee duties.

The purpose of the trust is to provide the best return for the Seller and it does every time. The side benefits of DOSC exemption and tremendous asset protection make it that much better than a subject 2, which is a DOSC violation and leaves you and your tenant at risk.

Illinois land trusts have been legal and in use for 115 years. Some guy called carlittle sitting at his computer is suddenly going to find a flaw in a method used by the wealthy for so many years? ;D ;D ;D ;D ;D ;D ;D

Have a nice day.

Da Wiz

To BooBoo and his obsession with the CFR. A comment on the difference between laws and rules and regulations that are intended to implement the law, such as Title 12. Elected officials pass laws. Hired administrators in various agencies pass rules intended to implement those laws. Often the rules have little relationship to the intent of the laws, let alone the letter. Often there are powerful forces who find it in their interest to influence the rule making procedures. However, these rules do not change the law they are intended to implement. When dealing with an agency that issues and administers these rules, you will be expected to follow them. The alternative is to go to court, and argue that the rule does not comply with the law. Once there, the judge will be looking at the law, not the administrative rules. So if you want to stay out of court, follow the rules. If you want to avoid penalties or stay out of jail. follow the law.

Personally I refuse to allow hired help (those administrators) dictate my actions. So I base my decisions on reading the law, not the rules. I have been involved in numerous situations where the rules conflicted with the law; and in those few that wound up in court, the law invariably triumphed. So don’t argue about what the rules say; who cares? We want to know what the law is, as passed by our elected officials and affirmed in courts of law- not what some administrator wants to push on us.

In the case of Garn - St. Germain, some clerk wrote 'THE" beneficiary rather than “A” beneficiary changing the whole meaning of the law. So what, you say? Would you rather be A man sleeping with your wife, or THE man?

Da Wiz

I DO understand trusts. Do I understand them inside-out, no. Do I understand the specifics of the trusts that you use for your needs, no. Do I understand ALL trusts, no. Do I understand the basic concepts of the trusts, Yes. I understand that there are trustee(s) and beneficiaries. I understand that the trust holds title to property and that all things must be done by the trustee on behalf of the trust.
I posed the questions because they were scenarios that I would have a concern about given the purpose for which you use them. However, you have pointed out that the particular trusts that you use have apparently addressed these types of issues.
I do have some additional research to do to better understand trusts. That is part of the reason I visit and contribute to these forums, to learn more. I am a bit confused about the “Doctrine of Mergers” you mention. I looked it up to see what specifically it was.

Your right, the trustee cannot modify the trust. The only thing the trustee can do is what the trust instructs them to do.

Mtnwizard, From your callous remark to my inquiry I can see you are not interested in ANY dialog. You KNOW ALL and have no desire to entertain a conversation. Thanks for pointing out that we all know nothing about anything and need to just buy your products. There are always flaws in the laws and contstructs that we use to govern things. If there weren’t flaws, then we wouldn’t have multiple ways of doing things. The key is to find the best product/method to produce the results you desire.

Since you already KNOW EVERYTHING, why do you spend any of your time here at the forums. If you wish to contribute something other than everyone is wrong and you should buy/use my products then please do. However there is no need to cast aside everyone simply because they don’t blindly accept you as the answer to life itself.

If I offended you, I apologize, but I merely said you didn’t understand trusts because the scenario you drew a person knowledgeable about trusts would have known could not happen and you did appear to be something of a wise guy in your initial post.

Extinguishments of the trust under the Doctrine of Merger is avoided in instances where a remainder-agent is provided, or wherein there is more than one beneficiary (e.g., as in our Equity Holding Trust System).
CA. Probate Code §15209

I did say, “Have a nice day”.

:smiley: :smiley: :smiley: :wink: :wink: :wink: :slight_smile: :slight_smile: :slight_smile: :slight_smile: :slight_smile: :slight_smile:

Da Wiz

Wise guy was not intended in the post. I re-read the post and I agree. The scenario as I outlined was not possible. The intent of my post is that if the original owner is on the trust, does it introduce any possibility of a"re-negotiation" when it comes time to cash out. As you stated, the intent of the trust you describe it to provide an advantage to the “Seller”. This changes the equation a bit. The instructions in the trust and the X% co-beneficiary is there to guarantee the Seller a return. Obviously the devil is in the details.

I do find some of your posts to be informative, that is what I look for. However, you remarks come back as perceived as “Wise guy” replies. That is where the offense is taken. I welcome dialogue for its content purposes. Thanks for the clarification.

At the end of the lease term (the trust can be set up for up to 20 years), the tenant has first right of refusal to buy the property at FMV. If he declines to do so, the other Beneficiaries have the same right, including the Seller who often IS the only other beneficiary. If nobody wants to buy it, the beneficiary can direct his Trustee to sell it.

Da Wiz

Hi Gary,

I have been watching the dialogue for awhile with great interest. There have been some great debates. I do wish everyone could understand that it is a lot easier to insult from behind the electronic veil of a computer screen than it would ever be face to face. REIClub is not the only forum (real estate and others) that I belong to where this problem occurs. It’s human nature. My message to everyone: If something annoys you …relax…post a question back or something we can all learn from. Pretend you are sitting face to face with the person you are about to criticize and you’ll be amazed to find the context of your message will change.

Now here’s my question: If I understand things right you have the seller of a property place the property in a land trust. You use a 3rd party non-profit agency as trustee. The beneficial interest in the property is assigned to you (90%) and to the seller (10%). This keeps the seller “in the loop” (with an equitable interest) and thus avoids the DOSC problem. I

Now, if you have a distressed seller (wants to walk away from the property, divorce, death in the family, etc) do you really want to have to chase them down 2 years later when, perhaps, a tenant buyer is ready to qualify and purchase the house out from under you?? What do you do if you can’t locate them? Does that not ‘cloud’ your deal? I would think it would be much better to have the original seller out of the picture…and I think many sellers would rather leave their problems (cash flow problems) behind. Your thoughts are appreciated.

Ryan C
Calgary, Alberta