Posted by Don (VA) on September 14, 2005 at 22:53:46:
In a land trust, the legal and equitable title pass from the “seller” (in quotes because the owner hasn’t sold the property…at least not yet) to the trustee. Therefore, if the seller needs to refinance, it must be done before transferring the property to a trust. Or bring it out of the trust, back into the seller’s name, refinance, and put it back in. But it can’t be refinanced while in the trust. (There are some ways around this, I suppose. The seller, who has an interest in the trust, could pledge part or all of his interest in the trust for a loan…but this wouldn’t be a refinance. The existing mortgage would remain on the property.)