Is this considered an assignment? - Posted by DavidV

Posted by Stacy (AZ) on January 25, 2001 at 11:36:02:

David, I don’t know the MS statutes. However, I gather what you are having problems with is a statute that forces you to record the assignment of beneficial interest.

You are trying to avoid having any assignment at all, by setting-up your corp as the initial beneficiary of the trust when it is created. Then, when the seller deeds to the trustee, there is no need for an assignment. Is this what you’re after?

In AZ this wouldn’t work, because the beneficiary must be identified on the deed to trustee. But in MS, I gather this is not a requirement.

The main reason we form the land trust with the seller as beneficiary, and have him deed to the trust, is because this action alone does not violate the due-on-sale clause. It is allowed, and commonly done for estate planning purposes, and so would not give cause for a lender to call the loan due. In our case, if a lender somehow becomes aware of this transfer and is threatening to enforce the DOS clause, we would have a trust agreement we could send them that shows the seller as beneficiary, which is perfectly acceptable and does not violate the DOS. The lender would not be satisfied to see only a memorandum of trust, they’d demand to see the trust agreement.

So, by doing what you are proposing, you would not have a trust agreement that you could send to the lender if you were challenged, because it shows title was conveyed to your corp, which of course violates the DOS clause.

If you think the risk of needing the trust agreement showing the seller as beneficiary is low, you could do as you propose. It’s up to you. Ron LeGrand would challenge them to go ahead and call the loan due. He implies they’ll back down. I can’t recommend this, but this is one extreme, in case you’re interested.

Does this help at all?

Stacy

Is this considered an assignment? - Posted by DavidV

Posted by DavidV on January 24, 2001 at 16:35:30:

When i set up a land trust and have my corp listed as the initial beneficial interest holder, is this considered an “assignment or transfer” of the beneficial interest? The seller would never be listed as beneficial interest holder. This would be in a subject to deal…reason for doing this is yucky state laws.

Re: Is this considered an assignment? - Posted by Stacy (AZ)

Posted by Stacy (AZ) on January 24, 2001 at 17:25:05:

Let’s see if I understand this. Someone will correct me if I’m wrong.

When the seller deeds his house to the trustee of your newly created trust, with your corp as beneficiary, he has conveyed his “real property” interest into the trust. Now the corp owns the trust (100% beneficiary), which holds the property. This is not an assignment of “beneficial interest”, since the seller didn’t have a beneficial interest in any trust to start with.

What are you trying to accomplish?

Stacy

Re: Is this considered an assignment? - Posted by DavidV

Posted by DavidV on January 24, 2001 at 21:33:38:

Tryin to get around the “assignment of beneficial interest must be recorded to be effective” title 91 thingy in MS. I don’t think the lender would have much of a chance to see the original trust docs.(which violates DOS since seller doesn’t remain a beneficiary…if one cares) A memorandum of trust should satisfy them if they get really pushy to see them. As long as no one sees the original docs why bother with the assignment? Any advice appreciated.