What is the eviction process for Trust or L/O?

I have been trying to fully understand the benefits to the seller in the land trusts so I have been reading the posts and learning not speaking.

What are the consequences of evicting an individual who does not pay the Bill or Lease Payment on time. From my understanding when you evict and individual under a trust it is like evicting a tenant. If the individual is in a Lease Option it could be more like the foreclosure process which could take 6 months to a year and many $$? I would appreciate some comments on this because I am still working on understanding this subject.

Thanks for the input!
NDI

ND,

You got it right. A lease option is excellent for a buyer but can be dangerous for a seller. It is easy for a buyer to claim “equitable interest” and force a much more expensive foreclosure proceeding rather than an eviction. I was on the buyer end of such a transaction years ago when the seller tried to evict me and sell the house out from under me to a friend of his at the end of my lease. I won – equitable interest.

As to the land trust, The RB/tenant is also a beneficiary with a contribution to the trust. This is not a down payment, it is a contribution to the trust that is returned when the trust is terminated as agreed. As a beneficiary in the trust he has already signed the papers to evict himself from the leased property for non-payment. He knows this going in and knows that he could lose his contribution (late fees, back payments, penalties, repairs etc.) and may also have to pay back the IRS for the deductions he took. Eviction with a landtrust is ALWAYS just that, an eviction.

Da Wiz

I have a potential buyer (bad credit) who has a very good job and he has been at it for about 2 years. His credit has soured because of a Divorce. His current wife has an OK job and I suspect that they could afford one of my rehabs sometime in the near future.

My thought is that if I decided to do a deal with them it would be in my best interest (No, I do not feel that I am immoral) to set up a trust. They would be beneficiaries who would live in the home. They would have some incentive to pay the bill on time because they would have a nice place to live and have an interest in the property. Of course get some $$$ upfront. If they defaulted it would be easier to boot them out. Under the trust option I would still be able to gain from appreciation on the property or a share of of it.

In the Trust it would difficult or impossible for his creditor to attach a lien to the property, thus more incentive for the trust and to pay on time?

I am sure there will be more questions latter.

Thanks,
NDI

ND,

Your correct about liens and encumbrances. When two unrelated parties have a beneficiary interest in the same trust it is virtually impenetrable.

As to future appreciation, the choice is yours. I like to share 50/50 with my tenants who already are entitled to writeoff the mortgage interest and property taxes. Their after-tax situation is far superior than it would be if they just had a straight lease.

Da Wiz

Wiz…

in doing these land trust, it seems the owner of the property is losing many great tax benefits… Besides asset protection to the orginal owner, what other benefits are there?? DO they still get to write off any expenses?? Also if the property is orginally in an LLC, like my properties, do i just put the LLC in the trust, or do i take the property out of the LLC and put it back in my name then in the trust…

My LLC gives me great tax benefits and I hate to lose them…

What tax benefits does any seller retain when he sells his property? None. In this case, because the seller retains an ownership in the trust, he is able to depreciate the property and because he remains on the loan, his credit will improve.

You need to set up the trust which will protect the real property from liens and encumbrances, and take title in your LLC, which provides great tax benefits as well as solid protection for your personal assets. Good luck.

Da Wiz