Can someone please explain mechanics of a Land Trust in a SS and a double closing. When we get the Warranty Deed to Trustee, we then get the homeowner to assign the beneficial interest in the Land Trust to us. Then when we find a buyer, he is buying the property that the trust owns, but how does the rest go with respect to the closing, title company etc. Do we close with the homeowner/bank first and complete the Hud-1 and then go close with our buyer? Somebody please point out the steps. Thank you, E ???
Hi there,
This is for you (and others looking at an explanation of the land trust).
Bill Gatten has written a wonderful book on it.
You can find more information at http://landtrust.net
Best wishes,
Ed Bisquera
I can tell how most double closings work; w/ land trusts, take this w/ a grain of salt.
At the double closing, in order to get the title from the homeowner in foreclosure to the end buyer…follow the white rabbit…
- funds from the end buyer go into the escrow account established by the title co,
- those funds are used to pay off the bank or original lien holder,
- then the original lien holder will release title, which is put into the escrow account
- where the end buyer is put on title
You as the investor or wholesaler are never on title, don’t bring any money to the closing, and get to pocket the difference from the end sale and the short sale. Sounds sweet, doesn’t it?
I welcome any and all comments.
Bill Gatten does have a good book on land trusts however he does not provide information on how to double close a short sale through a land trust. I have been searching for the answer to this question myself for some time now and have not had much luck. If there is anyone out there that knows i would appreciate the help.
This is how it was explained to me. When you negotiate a short sale, do all the paper work in your name, Trustee. When you find a buyer --hopefully before the closing–you and the buyer enter into a trust agreement with you being the trustee and the buyer being the beneficiary. In a land trust, the trustee is the public face and most often, the beneficiary is not known. At closing, the beneficiary (buyer) brings the funds because you have bought the property for his land trust as far as the title company/mortgage company is concerned. There is no double closing…After the property closes, you resign in writing as trustee of the land trust which takes you out of the picture totally. Be sure and get paid your fee before the closing and that part is not involved in the closing at all. The beneficiary (new owner) can then leave the property in the name of the trust and complete an agreement with a new trustee or do as he choses. I hope that helps.
Jared Severe’s SS course clearly explains it and shows you how
The Tewis gang does a great job at how to use a LT for a SS and WHY u want to use one (benes)
http://www.easyhud.com/forum/viewtopic.php?t=9
On another topic, Gatten’s LT system is great - has anybody used it in their own RE deals. Seems like a pretty secure way to control a ton of RE w/o the pitfalls of classic creative re
Lin there is a double closing.
if there was not then you can’t supply a certified HUD1 to the foreclosing lender.
the safest way to do it is have to companies.
Your double closing is as follows:
You take control of debtors property via a Landtrust. This prevents any other encumrances going on title before you get it closed. It also stops chain of title issues as long as you have the debtors last name involved. i.e. the Doe residential land trust. Either you or your company becomes the Trustee of that land trust.
Beneficial interest is signed over from the debtor to your other company. You cant have the same company being trustee and beneficial interest, it is a conflict and can cause title insurance issues, not always but if I were you I would play it safe.
Once you have negotiated the debt you bring your end buyer then your company as the trustee, purchases the home from the debtor for the agreed negotiated price. The title compnay will prepare a HUD 1 for this transaction. Your end buyer provides funds in the escrow / title comapny.
Your company as trustee sells the property to Joe Blow the buyer.
You will sign off on all contracts as acting agent for the company which is the trustee.
the title company wires the negotiated debt amount to the foreclosing lender. THis must be the same as the HUD 1( the first HUD) if not your deal will shut down. make sure your title company knows if they send the second HUD by mistake they will blow the deal.
the money left over after closing costs is made out in check form to the trustee ( YOUR COMPANY).
Now if you read the decleration of trust you will see the trustee is allowed to disburse the funds according to the beneficiary, well guess what thats you.
Put the check in the bank and away you go and get the next one.
hope this helps.
GQ
that’s correct
on the exit (back-end transaction) the conventional title-transfer happens (from Land Trust to final endbuyer). The Land Trust is then dissolved.
The monetary diff (profit) is spit out to the Land Trust beneficary (you the middleman/investor). Pretty slick.
As always in this business its always better to think and plan backwards. What’s my exit strat then engineer backwards to the entrance :biggrin
This is going to be the first deal where I will not actually be purchasing the house with my own money/financing. I have the seller and am in the process of negotiating the SS with the lenders. At what point do I attempt to enter into a land trust with the seller? Also, how would you enter into a land trust with the seller? Thank you.