Landtrust or no Landtrust

I have a house in NY where the owner is willing to take 60k, they owe 50k on their mortgage. The owner agreed to let me take over the existing financing and pay them the other 10k over a 3 year period with a balloon payment at the end. I will rent to own the property. I was planning on putting the property in a land trust as to keep more money in my pocket (no lender fee’s, no 10% down etc) and for security (Incase the owner gets sued, no one can come after the house). After reading some post, it seems that putting the property in a landtrust is not such a great idea. If that’s the case, how do I go about acquiring this property with no money down?


If you’re taking the property subject2, then there are no lender’s fees, 10% down, etc. Just whatever you and the seller agree upon.

There will still be closing costs, though, whether you go sub2 or conventional. And if you decide to do a landtrust, there’s costs for that, too.

Unless you’ve got a partner that is fronting the money, you’re going to have to come up with some to close the deal.

Also, if you’re taking title to the property, then it’s your house. You’re the owner, not the seller. The mortgage doesn’t determine the owner.

Sounds like you’re not ready for even deciding if you want a landtrust or not yet.


I was taught that when doing a "subject to existing financing " I needed to do the following
1- seller deeds property to land trust
2-change mailing address with lender
3-New insurence is obtained
4- seller assigns beneficial interest over to investor
5- Investor takes over payments

Other things needed to do
Title search/Limited power of attorney/authorization to release loan Info

How does the sub2 avoid the DOS (Due on sale Clause)?
I guess I dont understand the sub2?

Instead of doing alot of retyping, I’m going to just give you this link:;action=display;threadid=8985;start=msg38396#msg38396

If you have any more questions after reading that, let me know.


Right now I have a verbal contract with the seller. What’s the next step? Do I fill out a Purchase agreement and note that this is a subject 2 financing deal and specify the terms?

You will need a purchase and sell agreement on the property with the details spelled out, yes.

Have you got any books/courses on subject2 investing? They will have everything detailed out as to how exactly to proceed.


What books would you recommend?

Thanks for all your help, I appreciate it

Well, that’s a stuff one, as the only one I recommend on Sub2 is anything by John Locke. Unfortunately, at this time, John is no longer selling any new books or courses. It may be possible to get one from a local fellow investor (if you pry it from his cold, dead fingers) or possibly even on ebay.

However, anything that you can get ahold of on the subject is better than none at all (well, probably almost anything).

Look at your local library or bookstore, then check here on this site for some material.

Good luck,


John himself just recommended anything by Bill Bronchick. He’s the one who wrote the article “There’s No Due On Sale Jail”.

His site is Modest, ain’t he? :slight_smile:

My suggestion is to use a land trust to structure your transaction. Instead of taking the property sub2 by having the seller sign title over to you thus creating liability have him vest his title into a inter vivos land trust and then have him assign 90% of the beneficial interest to you and he would retain 10% thus conforming to IRS federal law. It is like a sub2 but a 3 rd party trusteee would take the legal and equitable title to the property. It is much safer that way and if you do not know or understand sub2 in you taking the title I would not do it.
By using the land trust you are asset protecting the real property and protecting the seller interest in the property. You in most cases doing it this way can avoid a myriad of legal issues should something go wrong i.e sellers sues you for taking undue advantage of him etc.
Another caveat is assign the beneficial interest to your corporation if you have one created and as most land trust or asset protection gurus will attest that will provide very good asset protection for your real estate from charging orders, judgments, liens, even IRS liens, marital disputes, untoward actions by a party and so on.
If the seller hasa beneficial interest and you are following the law most any judge should the seller come back at you will throw it out as long as the trust is structured properly.

Sub 2 are fine once you understand them and John Locke course is very good indeed.

Land trust do legally circumvent the DOS as long as they are structured properly in following the stipluations of the Garn ST Germain Act of 1982 or IRS 12 701 j-(3) section 8. Any borrower on the deed of trust is allowed to vest his title into a inter vivos trust as long as the borrower remains A beneficiary and there is not intent to transfer occupany rights to another. That is the short version.


Just FYI, but that is exactly how landtrusts are taught to be used with Sub2 (at least, taught by those who recommend them), and that is exactly the way North Carolina views a fraudalent land trust. Several other states are very similar, or soon will be, on their on views on landtrusts as performed as you laid out.

All of this was thoroughly discussed on the link that I provided, but a quick recap:

The land trust is NOT set up for “asset protection.” The land trust is being set up so that the investor can take control of the property without the lender finding out. In other words, trying to circumvent the DOS. In the eyes of the NC AG, that’s a bogus land trust. And as stated, many states are following suit.

Just the facts.


I think you may not fully understand and trusts and their structure so if you be so kind please go to under Bill Gattens system and read through the website. Using them in assisting the seller is not just to legally circumvent the DOS but to asset protect and provide estate planning for the sellers property.
Using a 3rd party co-beneficiary land trust provides numerous benefits for all parties concerned.
As long as you are abiding by Federal IRS tax law that in essence supercedes state law regulations.
When you use multiple beneficiaries in the trust, this provide a very good degree of asset protection due to the non-partitionality of personalty which is what one has when they acquire beneficial interest in the trust in 48/50 states since if you check Kenoe on land trusts and previous cases of precendent creditors can NOT partition a trust or divide it up via a charging order or judgment due to other beneficiaries in the trust would be affected and that is againest the law. The creditor can worse case acquire that one beneficiary’s interest but the trust if structured propertly can NOT be pierced unless as you mentioned there was a fraudulent convenyance to specifically defrarud creditors and that is hard to prove and there needs to be intent to do so.
That is why you use a 3 rd party trustee who preferably is a out of state non-profit corporation at an arms length transaction and what happened in NC was illegal in how the trust was formed so it was a dry or abusive trust from the start so yes it was a scam but our system is most definitely NOT!!! Another issue is when you have your trustee and the beneficiary in dual roles an conflict of interest occurs and being a labeled a dry trust is inevitable also when there is a collusion our non arms length tranaction or business between beneficiaries in the trust.
When you add the corporate entity such as a LLC,. FLP., LP or whatever that provides even better asset protection used as a beneficiary in the land trust.
Please check out this link on Bill G letter to Dyches Boddiford on land trusts.;action=display;num=1128662900 and you will find some very good info on how Bill G uses his system…
Raj, I have alot of respect for this board and you seem very knowledgable in your postings I just felt the need to address some issues you may not be clear on I know I have learned quite abit in my extensive research on them.


I do understand landtrusts, and I understand Gatten’s PACtrust system.

Regardless of how you set up the landtrust, it was set up for the sole purpose of transferring control, and essentially, ownership of the property to the investor, not asset protection. Would that be hard to prove? Yes, in most cases it would. Would you want to have to go to court to fight for it? That is a personal decision. Personally, I would rather not, as I could not sit in the chair and honestly say that the trust was set up for “asset protection.” However, that’s just me.

I’ve got no problems with using landtrusts, so they way they’re setup. If you want to put YOUR property into a trust, then do it at the closing table when you buy. Why is it necessary to have the seller do it BEFORE you buy the property?