Ive read all the articles and heard the audios. I was wondering if someone could tell me all the contracts and forms I need to perform a sub to. I understand I need a sales agreement and an authorization to release. What others are needed? Both with using a trust and without.
what is ur exit strategy here? first u must determine that depending on what ur purchase price is and where and how u r going to make ur money.
r u going to L/O, CFD, sell on wrap, sell outright for cash?
L/O. but for the current scenario, what forms do I need just to take owner ship subject to.
Do I use a regular purchase agreement? What other paperwork?
All you really need is a deed… grant deed or warranty deed… just get a deed. Of course… your ownership will only get held up in court once you record it. If Jack Black records his before you… your loss.
Alot of investors would also tell you to get a CYA letter… Cover Your Assets… which is really just a disclosure saying that if the lender calls the loan due… that you do NOT guarantee that you will pay it off as well as saying that you are buying the property ‘subject to’ the existing mortgage and you have no intentions of assuming it. It’s mainly to avoid litigation if in the future the seller has a ‘lapse’ of memory.
Also… if you want to do a short sale with the Lender… they are most likely going to want either a authorization to release information or a power of attorney for them to talk with you.
You can also get a sales agreement as you said basically just showing that you are buying the property for the loan amount. Just a ‘meeting of the minds’ which you can send to the sellers attorney along with the CYA letter if sometime down the road he forgets the program. Unlikely event… but it probably will happen if you buy sub2 alot.
You may also want to get a ‘escrow letter’ basically saying that if you or whoever you sell the house to pays off the loan… any money remaining in the escrow account will be applied towards the loan at closing… lessening the amount.
But getting down to the nitty gritty… all you NEED is a signed deed.
Taking it Sub/2
You put the property in the Mr. & Mrs. Seller Family Trust.
You make the Trustee someone YOU trust. This paperwork gets recorded.
You then have Mr. & Mrs. Seller sign the beneficial rights of the trust over to your LLC. This is not recorded.
Have the sellers sigh over to you limited power of attorney and the other release forms. This is not recorded.
All of this is legal.
NARS does it slightly differently than Indy.
The Seller puts the property into the trust, naming a non-profit corporation as the Trustee.
The Grant Deed is recorded. The Trustee now owns the property, the Seller owns the trust. Everything done within the trust is legally unrecorded.
The Seller retains a 10% beneficiary interest and grants you a beneficiary interest. No release forms or limited power of attorney form is required.
The Seller’s property is never at risk until termination at which time his mortgage is paid off and all his agreed upon equity is paid.
i was trying to figure out a way to work an acronym into the conversation