Posted by SedonaSam on January 08, 2010 at 07:15:23:
From my personal experiences, yes they tend to stay longer, and in all
cases but two they ended up buying. No as to the sizable down
payment. Here is the process:
IN THE BEGINNING
A (title-holding) land trust is created in the name of the current
owner (the settlor) who holds a 100% beneficiary interest . No one else
is involved, only the owner and his/her trustee. In a land trust, unlike
other trusts, full legal and equitable title is held by the Trustee, which
is why I only use a professional, non-profit corporation that
specializes in holding trusts.
Escrow is opened to facilitate the assignment, in the existing land
trust, of beneficiary interest to co-Beneficiary.
A Beneficiary Agreement is created between beneficiaries wherein
the property’s Mutually Agreed Value (MAV) is established in order to
determine settlor beneficiary’s beginning Beneficiary Contribution
(equity and/or any non-recurring closing costs, etc.). This
documentation also reflects all co-beneficiary contributions (equity
contribution and/or non-recurring costs).
A Possession and Occupancy Agreement (triple net lease) is
executed between the trust and the 2nd co-beneficiary (responsibility
for collections and disbursement are then assigned to my Trustee).
AT THE END
The property is either sold by the trustee at FMV, or purchased and
refinanced by co-beneficiary who has first right of refusal at FMV.
All loans are retired (out of the proceeds of the sale or refi).
Costs of disposition are paid (e.g., escrow, re commissions, etc.).
The settlor beneficiary then is refunded its beneficiary contribution
(beginning equity and non-recurring startup costs).
The co-beneficiaries are refunded their beneficiary contributions
(non-recurring startup costs, equity contributions, escrow fees, any
part of commissions paid at inception, etc.)
ALL remaining (net) proceeds are distributed among beneficiaries in
proportion to their respective percentage of interest held.
That’s it. Sounds complicated but it really isn’t and it has provided
solid and safe investments.