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?