Land Trust, Mortgages, etc.

Before my question, here are some assumptions.

  1. Property is purchased.
  2. Property is put into Land Trust.
  3. Interest in Land Trust is assigned into LLC.

Q1. Can the original borrower ever be relieved of responsiblity of the note without refi’ing?
Q2. If the mortage ever defaults, even with the property in a Land Trust, and interest assigned to an LLC, who does the lender come after and who’s credit will suffer?


  1. Yes. If all parties agree, the original noteholder can refi;

  2. The lender comes after the person with the name on the loan and that’s whose credit will suffer.

The way I do a land trust, my tenant pays three months lease payments in advance, two held in reserve in the event of default. Should he miss a payment, eviction proceedings begin and we have two payments in reserve.

Da Wiz

So let me make sure I have this accurately assessed. Regardless of where you hide the bean under the cup and shuffle the cup, the bean is still the same bean.

In otherwords. If we use an individual who has a high credit score in order to get our property, that individual can ever be relieved of his/her responsibility of the note without that lender being paid off?

Correct. You can take over a payment subject to, but should that note ever go into default, the lender will seek out the person who signed the loan. That’s why we do it as described with a contingencey fund – to make sure there is never a ding against the credit of the owner or seller.

Da Wiz