Protecting Property in Land Contracts

okay so let me get this straight if anybody can help me out here. i want to purchase a duplex under a land contract and i’m concerned about whether or not the seller will acquire any liens on the property. to my understanding, i’m learning that if i have the seller convey the property to a trust, then any liens that the seller acquires will not affect the property in the trust. does anybody know if this is correct?

I’m not an atty and cannot practice law.

I would think that if there were any liens in place prior to the transfer (mortgage) that they would have to transfer to the trust along with the property. simply putting property into a trust doesn’t make the mortgage go away (else NOBODY would have a mortgage left).

similarly, once the property is in trust, the trustee is the effective owner and any encumberances would have to be approved by the trustee. so I don’t think that the grantor could encumber the property.

Just make sure to use a reputable 3rd party trustee, and not the seller’s “Uncle Fred.”

i understand that if the property goes into a trust with liens that they will remain. But what i’m trying to figure out is if future judgements that the seller acquires, are those able to be attached to the property after the property is owned by the trust?

A registered land contract will put a lien on the property inferior to existing liens and superior to future liens. Keep in mind that the contract will trigger any due on sale clauses of existing mortgages.

I think the correct statement should have been, “MAY trigger any due on sale clauses…”