Hello Everyone,
I am not new to investing but I am new to subject to type takeover deals. I have been doing some research and I have come accross the land trust which from my understanding seems to be a safe tool to use in buying subject to.My question for all of you is:
Do any of you use land trusts, if not why?
Thank you. All input would be appreciated.
Never have used one to buy Subject 2… The land trust guys tell you that you have to in order to protect you from the DOSC being accelerated… Hasn’t happened to me yet and I do a ton of Sub2 deals…
Good Investing
Michael Quarles
Land trusts do not protect from the DOSC. The change in the right to occupy the property is the trigger. Do your sub 2 with or without the land trust.
I tend to agree with BLL. The gurus and others latch onto the Garn St. Germain Act which limits a banks ability to accelerate the loan under the DOSC when a property is transfered to a living trust. However, the same section of the act specifically states that a change in occupancy rights voids the exemption.
Well then ladies and gentlemen, what is the answer? If there is one. Im just getting into Subject to and would love to know. Have you ever had a lender get close to calling the loan due? Thanks in advance for your info and Happy Holidays to all…
CHB1,
Glad to meet you.
$Cash$ Sub-2 Deals 500+ … Lenders Calling Loan 0 … Land Trusts Used 0
John $Cash$ Locke
John I bet you read the article about the guy in Ohio who was finded 39k for using a land trust didnt you… Thats right you sent the thing… 
I chatted with Gattons “Main Man” about it and he said the Investor wasnt using it correctly…
And I have noticed that the trust guys are leaning more towards asset protection then DOSC…
Great to meet you sir, You are well respected on this site and around the country as well Im sure. I do appreciate all of your advice on REICLUB and look forward to learning more from you in the future. Happy Holidays… Scott
CHB1,
Thank you for the kind words and as you have probably already guessed, never used a land trust. Some states consider it hiding ownership and that is the way I felt about using one for many years, still do.
Michael,
North Carolina is none to fond of land trusts, ask any of the investors who were called up in front of the Attorney Generals office for using one. They consider it in violation of the Fraud Statutes. Recently I spoke with an investor who posted on this site that was being called up for using one in NC, he will not use one again from speaking with him after the AG’s office was done with him.
I believe if some of the course writers who started saying that a land trust should be used for creative investing, had not used the phrase “hide ownership” the views would probably be different from the State Agencies in todays investing climate.
John $Cash$ Locke
Hello John
I imagine California would have issue with the trust to from a constructive notice view. We have this little law that says you can’t sell more than 8 contracts without being a real estate licensee and I bet disguising ownership using a trust and then selling the rights to the trust would most definitely violate that law…
Michael
I’ve heard of using a land trust to make it look like the chain of title goes directly from the seller to the end buyer. The thinking is that lenders will be scared to make new loans to end buyers without the “seasoning” of the title, so the trust is used to keep the middleman (the investor) out of the visible recorded chain of title.
I asked a lender about this, and I was told the only seasoning lenders are concerned about concerns the note, not the title. If this is true, why use the trust?
New kid on the block here been reading/studying everything everywhere for about a year and I think I read or heard that buying Sub2 in Land Trusts was primarily because of seasoning issues on the resale. I guess the thinking behind it is if your turning houses over in 3 - 4 months or less then the banks that buyers are using will have seasoning issues if you only owned it for a couple of months. Of course if your state has laws against Land Trusts (as in NC) then there’s nothing one could do and stay within the law. Again I’m new to this so I don’t know what makes the bank look differently at it if it’s in a Land Trust and I could also be completely wrong. Just throwing the info out there for the “seasoned” (no pun intended) investors here to comment on.
I guess if the strategy is to L/O the houses then seasoning would never be an issue since the home would “season” ?!??!?? over the term of you and your T/B’s lease agreement. Yes ? No ? Don’t quit your day job kid ? :help
Thanks for the great info,
-Ken
:doh
Marktheshark jumped in front of me cause I’m so slow at typing :banghead
-Ken