I am putting a course together and would like to include a list of title companies from every state that are investor friendly and have no problem when a land trust is the seller of a house.
Wow. What a great idea. That would sure beat learning everything through the schools of hard knocks. :banghead
But why would I actually want to think that far ahead? :beer Just so I could have more time for beer? Yes!
I’m going to have to get familiar soon, particularly if there are issues with FHA and Land Trusts. I don’t see why there would be – it’s just another form of ownership, like being owned by an LLC. Maybe they have some problem with the transfer of the beneficial interest? I don’t understand why. People sell stock in a business all of the time but that doesn’t mean they are selling the actual business. The beneficial interest seems to me to be just like stock and that should be able to be sold to whomever, without title actually passing. Once the initial 90 days has passed after title transfer into the trust, I don’t know why lenders object on the B-C side.
Maybe it’s a subtlety, but it’s a pretty important aspect of why a title holding (land) trust is an ideal way to hold title.
Forget land trust, there’re very few title companies that will insure a property by way of a land trust. Their all but dead. Option Contracts are the way to go.
Trusts are great to use in Michigan because they have such a long redemption period. If you put the property in a trust before it forecloses then you can still work the short sale during the redemption period.
Land trusts are alive and well. They are the only way to get around the seasoning issue. The option contract doesn’t solve any problem that the land trust can’t. I have clients all over the US that use land trust and have no problem with seasoning. As long as they are put together correctly they are the perfect way to do a short sale and sell quickly.
I agree trusts are great…
What is the difference between a Land Trust and buying under an LLC? Each way aren’t you able to avoid the title seasoning?
Ahhhhh. A good question, particularly for your RE investing attorney, to see if they know their stuff. But let me take a stab at it.
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One difference right off the bat is that the transfer into the LLC would be an actual conveyance of title. Your Seller/Borrower would have just officially given up title, with no residual interest. Not a bad option for the Grantee, if they can work a short sale, yet what if you can’t? Considering their equity interest is worthless, the borrower might be open to it, but what effect would this have on the LLC’s balance sheet?
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Because the property would still have existing liens attached to it, those liens now become liabilities to the LLC. It’s just like buying an existing business with A/P on the books; you may have transferred title, but you’ve done nothing to satisfy the creditors.
3)Then there is the consideration that whatever assets the LLC owns, the equity in those assets is now encumbered with the liabilities attached to the property, unless you set up a unique LLC for each property. Not a bad idea, yet probably more paperwork and cost than necessary. In my state, each LLC would need to be registered with the State. So it costs a minimum of 50 bucks to set it up.
There are other reasons, but why are you avoiding the creation of a Land Trust?
Thanks for the response on that one. I’m more familiar with an LLC than a Land Trust and that’s why I ask. What are the steps to set up a Land Trust? You could acquire the property under a new found LLC that will only have the property as it’s only asset. I’m a newbie so I’ll have to research the Land Trust a little more. I’ll have to see how that works here in Wisconsin.
Just an update. I found a nationwide title company that has no problem doing back to back closings with a land trust. PM me if you would like the information.
modified due to rules violation