Advice on assignment of contract - Posted by Ed_IL

import · February 12, 2000, 10:24pm

Posted by Jim IL on February 13, 2000 at 24:46:57:

Ed,
First off, CONGRATS! you got a buyer! WAY TO GO!

Now, remember, I’m no expert, (as you know, since we have met. Õ¿Õ) but I’ll take a stab at this one.
When you bought the home, and took it “subject to”, didn’t the seller deed the property to a trust and then assign you beneficial interest?
If that is the case, the trust owns the house and you own the trust.
So, it is my understanding that there will only be ONE closing here.
You will goto the closing as the “beneficial interest” in the trust, and your trustee will also be there.
The Trustee will sell the home to the new buyer for the trust.
The funds will be paid to you as the “Beneficial interest”. I’m just not sure if the title company will pay the trustee, who then pays you, or if the funds go directly to you as beneficial interest?

In any event, in Illinois, the transfer tax is not to be paid on the first deal (your “Subject to”), because it is exempt. What the seller sold you was the trust, not the property.
Didn’t you see the stamp on the deed when you recorded it?

If you want to greatly reduce or avoid paying closing costs, why not just sell your beneficial interest in the trust to the new buyer for cash? (your equity)
He can then do as he wants with the loan afterwards.
And, as beneficial interest, he can then appoint a new trustee to the trust, or even have the home deeded to him instead of the trust.
Whatever works for him, since he now owns the trust.

Then again, I am a relative newbie, and these are just my thoughts.
Maybe one of the “Big guys/gals” here will come along and shoot my ideas and thoughts here full of holes?

Whatever you do, you are making a profit, and for that I say, “WAY TO GO!!”

Good luck,
Jim IL

P.S. Does this mean the beers in Atlanta are on you? Õ¿Õ

import · February 12, 2000, 10:24pm

Advice on assignment of contract - Posted by Ed_IL

Posted by Ed_IL on February 12, 2000 at 23:24:58:

Sorry to continue to ask questions, but we are almost there. We just got an all cash buyer for our “subject to” deal. We signed a purchase and sale agreement today with our buyer. Now onto a closing date. I want to avoid paying closing costs and transfer taxes etc. twice as I would in a double closing (or some may call it a simultaneous closing where you take title.) So tentatively what we are planning, is to assign the “subject to” contract we have with our seller to our new buyer, as well as keep the purchase and sales agreement we signed today in effect. So our new buyer has a contract with the seller “subject to”, however, they also have a contract with us for the cash sale and mortgage payoff. We have beneficial interest in the Land Trust that we put the property in to when we signed the “subject to” deal. However, the cash buyer is going to pay off the loan so do I really assign the “subject to” deal to them? Basically, we are looking for the easiest way to do this. We have a “subject to” deal with a seller and a cash offer from a buyer. How do we payoff the mortgage for our seller, receive our profit, and pass title from land trust to new buyer, without having to pay transfer taxes and closing costs twice. Any advice is always greatly appreciated.

import · February 12, 2000, 11:48pm

Re: Advice on assignment of contract - Posted by JPiper

Posted by JPiper on February 13, 2000 at 24:48:32:

Sounds like you?re laboring under some misunderstandings.

When you assign a contract, you assign the contract that you?ve negotiated with the seller?.in this case your subject-to deal. What you don?t do is enter into a new purchase and sale contract with the buyer.

What a purchase and sale contract does is obligate you to perform according to the terms of the agreement?.in this case, deliver title. The purchase and sale contract that you and your buyer signed has absolutely nothing to do with assigning him a contract. Further, a purchase and sale contract does not give you latitude to just kind of decide how you?re going to do things?..it obligates you to do what you agreed to do in the contract.

Your choices at this point would be to 1) take title subject to from your seller?.and then sell to the new buyer for cash or 2) renegotiate with your buyer to simply assign your existing contract with the seller to him, at which point he can pay the loan off after he has title or 3) renegotiate your contract with the seller amending it to an all cash deal, and at that point terminating your existing contract with the buyer and assigning your new contract to him.

Clearly you have two existing contracts at this point?..and sometimes going back to change things runs the risk of muddying the waters sufficiently to cause one or both parties to back out of the deal. Before you do this you should give this sufficient thought since none of us know what your relationship is with either party.

Next time out, give this all considerably more thought before you decide your course of action.

JPiper