Let me get this right: To avoid calling the DOSC due the property should be bought in a Land Trust “Subject To” the existing loan and should be done this way everytime a “Subject To” deal is made???
Should also do this even though you plan on turning it in a short period of time and also long term (rent to own, lease option ect)???
Once the property is in a Land Trust it should be placed in its own LLC for protection???
Is the term “Land Trust” and “Land Contract” kind of being used similar or are they the same thing? I read a post stating to: Buy title in a Land Trust… Trustee will create a Land Contract and disperse funds when received : Can some please explain the process?
I know what a Land Contract is but got confused after the post I read about Land Trust.
vestor,
the only one who controls whether or not they will exercise their right to “accellerate” a loan, is the maker of such loan if allowed by law.
you can use any technique you want to control real estate. Just understand that if allowed by law, and you violate the terms of a mortgage, there MAY be consequences. If the loan is performing (or payments are being made regularly and on time) I can’t see why a loan would be accellerated. But, that is not to say that it has not or will not happen.
Should also do this even though you plan on turning it in a short period of time and also long term (rent to own, lease option ect)???
it is not nescessary but you must be the one to determine you own comfort level. There are many ways to protect your interests without a land trust. weigh the pros and cons and make an educated decision.
Once the property is in a Land Trust it should be placed in its own LLC for protection???
Do you mean to assign beneficial interest to the LLC, or purchase the property in the LLC name (title) and transfer to land trust and have a 3rd party trustee hold title?
the term land trust and land contract are two different instruments. they are used for different purposes.
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the land contract is like a lay-away plan. you agree to specific terms with your buyer/seller and when you perform on those terms you will gain the title to the property.
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a land trust can be used in a similar way but it is primarily used for estate planning purposes and a certain level of anonymimity and protection between the parties involved.
Redwing is on the money. Only the lender can in fact decide whether or not to accelerate a loan due to comprise of their alienation provisions. And, as most may know, one’s violation of a lender’s due on sale admonitions is in no manner against the law or even underhanded or devious: doing so merely allows the lender, supported by federal law, to call the note if they choose to do so.
The reason we say you can avoid the DOSC with a land trust is because the Federal Law (12USC1701-j-3…the Garn-St. Germaine Act) implies that a DOSC can not be effectuated by any lender for reasons of a borrower’s placing his property into [any] inter vivos trust, so long the borrower remains “a” beneficiary, and so long as the trust document does not include any provision for occupancy rights, and so long as the trust is fully revocable by the borrower at the point of it’s creation. And do note too that a grantor’s agreeing with his/her co-beneficiaries not to revoke the trust on his own without mutual agreement of all beneficiaries does not constitute a trust’s being an “irrevocable” trust (E.g., See Loring on Trusts).
Re. this issue, if someone tries to tell you that the Code of Fed. REegs disputes the US code re. being “the” vs. “a” beneficiary and not being able to lease a property out…tell them to soak their head. The CFR is not the law when it comes to Title 12, as would be well evidenced if the nay-sayer would merely read Title 1 of the CFR which clearly points out which codes are enacted law and which are not. Title 12 of the CFR is merely prima facie evidence of the existence of Title 12 of the US Code 1701-j-3 (See U.S. House of Representative Law Revision Counsel 2005).
Bill Gatten