Land Trust - Posted by MasonNV

Posted by Marty Weisberg on November 15, 2000 at 15:29:13:

No, a creditor cannot put a lien against the corpus of a trust. That is one of the benefits of the trust.

As for being forced to sell their interest in the trust, it would be possible if their were only one beneficiary in the trust. That is why you should always have co-beneficiaries in the trust. Then a lien or judgement holder would not be able to partition the asset.

Marty

Land Trust - Posted by MasonNV

Posted by MasonNV on November 09, 2000 at 19:18:45:

I’m looking for more information on creative ways around the due on sale clause. I would like to build a solid set of holdings for my portfolio, or sell some but carry financing. Is there a way to carry a note with a bank 1st already in place? the land trust right? how does it work? Does anyone know where I can get more info on this subject?
Thanks,
Mason

Re: Land Trust - Posted by Brian Mac

Posted by Brian Mac on November 10, 2000 at 23:49:08:

Mason

Here’s one to check out:

Do it yourself - Posted by Jim IL

Posted by Jim IL on November 10, 2000 at 16:00:33:

Mason,
There are plenty of courses, books and articles out there that will guide you as to how to do this.
Bill Gatten as mentioned has a good program, and you can actually talk to him here about it, or his own website.
Also, Bill Bronchick has good articles and courses that will show you “How”, plus the appropriate forms.
Legrand even has these type of things in his courses as well.
After you do one, they are quite simple to set up.
Take a look at www.legalwiz.com for more info.
There is even an article here in the “How to” section about getting around the due on sale issue.

HTH,
Jim IL

Re: Land Trust - Posted by Bill Gatten

Posted by Bill Gatten on November 10, 2000 at 15:18:11:

Mason,

A land trust by itself doesn’t get around a violation the DOS, it merely serves to hide the conveyance from the lender (and does a pretty good job of it).

To avoid the violation per se, the borrower needs to retain a beneficiary interest in the trust, thus assigning only a partial beneficiary interest (50%, 90% 99%, whatever, to the party assuming the benefits of ownership. Then to comply with IRC 163(h)4(D), there then needs to be a contractual obligation to make payments on deductible items (interest and p. tax), which becomes a triple net lease agreement. When you couple the triple net lease, with the land trusts, an Assignment and a Beneficiary Agreement, you can really work some magic re. RE transfers. For short-term holds, however, all you need is a simple land trust conveyance.

As Dew suggested you can click on the banner ad above (if its not there, click your refresh button a few times and it’ll come up). Or just go to www.landtrust.net. Another even more definitive site relative to simple land trusts is www.legalwiz.com.

Bill Gatten

Re: Land Trust - Posted by dewCO

Posted by dewCO on November 09, 2000 at 22:26:05:

Get info by readiang the articles here and archives, and checking out Bill Gatten’s super charged land trust at cal-equity.com

Re: Land Trust - Posted by clark

Posted by clark on November 11, 2000 at 24:03:30:

Bill, thanks for your insight on “Land Trusts” its been most helpful. Let me ask this, would a “Land Trust” work on a rehab over a period of three to four months? Just enough time to fix-up and sell is what I’m planning. Also, say the beneficary gets into financial trouble again say medical bills or maybe even a law suit can a lien be put on the property? Thank you

Sellers just don’t go for the PACTrust! - Posted by Nicky

Posted by Nicky on November 10, 2000 at 22:23:23:

It’s just too complicated and the sellers feel like you are some sort of authority (They don’t appreciate this) When I explain my “LAND TRUST” to them they are all mostly fine with this and say that it makes a whole lot more sense than the PACTrust. They say that the PACTrust sounds a lil shady if you will. They want no part of it!

I will be dealing with the regular “LAND TRUST” from here on out. What will y’all do?

You have to go with what people understand and are comfortable with. The PACTrust does not qualify for that!

Nicky

Re: Land Trust - Posted by Marty Weisberg

Posted by Marty Weisberg on November 11, 2000 at 10:47:28:

Clark,

Yes, the land trust will work for you on a short term basis. What you want to do is have the Seller place the property into HIS/HER land trust. He/She then assign a benefial interest to you (as Bill described in a prior post). This will also help you when you resell it in 3 or 4 months because it will help to avoid the chain of title issue so many are having to deal with now.

The property WILL be protected from liens, judgements, etc. against either you or the Seller. It will not protect you however from any liens against the property itself, ie; mechanic liens.

Hope this answers your questions.

Marty

Re: Sellers just don’t go for the PACTrust! - Posted by Bill Gatten

Posted by Bill Gatten on November 12, 2000 at 13:26:58:

Hi Nicky,

A few thousand folks around the country would agree with you. However, whether it?s the PACTrust or anything else, if you can?t sell it comfortably, then its either definitely not for you; or you need more instruction in how to do it. A simple land trust, if it works for you, is the easiest way I know of assuming ownership?don?t stop doing it.

Candidly though, here is the total sales pitch for selling a PACTrust (And I have never had anyone EVER suggest that it sounds shady or too complicated):

“Hi, I saw your ad in the paper today (or ‘saw your sign out front’), and I?m looking for folks who are selling on their own, who might be willing to sell to me on the basis of keeping the existing financing in place for a while…a year or two. If so, I?ll handle 100% of all of the mortgage payments, taxes, insurance, etc. just for the right to the tax write-off and to be able to [re]finance it in my own name in a couple years.”

Nicky, remember that the “manner” or system by which you protect yourself and the seller shouldn?t become important until the issues (or their objections) come up…after the prospect has been sold on leaving the loan in place. At that point, if you understand how the PACTrust works, you can then block virtually every objection they might come up with (DOS, tax benefits, asset protection, non payment, potential for damage to property, ease of dispossession, 3rd party transferability, etc.)

For example, how would you accomplish just the following items with a simple land trust (which, by the way, we do by the dozens, and which we advocate as singularly the best means of holding ownership interest for yourself…alone).

  1. Transfer of tax benefits to a resident third party who would live in the property under a “sandwich” arrangement

  2. A trust ?equity-share? arrangement with full tax benefits to the resident owner, wherein after selling the property, you freeze your equity, eliminate financial and management responsibilities to the property, while continuing to share in all future profits (principal reduction, appreciation, cash-flow etc.) while someone pays all the bills.

  3. Avoidance of partition by judgment creditors… for ALL parties

4 Rapid and simple eviction of a recalcitrant purchase option tenant

5 A doubling, tripling or quadrupling of net rental income from a tenant in your trust-held property.

6 Obtaining an agreement by your tenant to cover 100% of all maintenance management and major repairs (e.g., new roof, hurricane or earthquake damage, etc.)

7 The ability to make BIG money in ?no? equity, ?marginal? equity and ?negative? equity properties.

8 Avoidance of violation of the due-on-sale clause, versus simply surreptitiously hiding it

I currently have a couple properties that are not in PACTrusts?I even now have one on a lease option, and another in a simple land trust. However, the reason I like the PT overall is because it gives me the freedom to meet virtually any buyer?s or seller?s objection head on, and deal with virtually any property out there: whether is upside down, fallen to the ground or besieged with creditor or tax liens.

Bill

Re: Land Trust - Posted by JohnBoy

Posted by JohnBoy on November 15, 2000 at 12:23:58:

I assume the property would be protected against any liens, judgements, etc. providing the creditor doesn’t know that you have a beneficial interest in the property? If they took you to court and you had to testify to whether you had any beneficial interest in any land trusts, then they could attach a lien against your share of the interest in the property, couldn’t they? My understanding is that a land trust will HIDE your name from public records as having any ownership in a property, but it isn’t an asset protection to save you from any creditors that wanted to place a lien against the property, “IF” they found out you were a beneficiary of a land trust, which they can find out by taking you to court.

Re: Land Trust - Posted by Marty Weisberg

Posted by Marty Weisberg on November 15, 2000 at 13:26:33:

According to Illinois law which is the basis for all land trust law, this is what I know about it. By placing the property in a land trust, you convert the real property interest to a personal property interest. In so doing a creditor cannot put a lien against the property. Chicago Federal Savings & Loan Association vs. Cacciatore, 25 ILL.2d 535,185N.E.2d670(1962) and Chicago Title & Trust Company vs. Mercantile Trust & Savings Bank Ill. App.329, 200 N.E. 992(1939) and Rochford vs. Laser, 91 ILL. App.3d 769, 414 N.E.2d 1096,46 ILL.Dec.943 (1980),

The title to real estate held in the land trust is not subject to special statutory liens. Nelson vs. Fogelstrom, 5 Ill.App.3d 804, 284 N.E.2d 339 (1972)

Re: Land Trust - Posted by JohnBoy

Posted by JohnBoy on November 15, 2000 at 14:00:01:

Ok, if you can’t put a lien against the real estate since it is owned by a land trust, what about a lien or judgement against the land trust itself that the person you have a claim against is a beneficiary of the trust. Can’t you attach something against the trust to collect that beneficiary’s share that would go to him/her when the trust sells the property? Could that beneficiary be forced to sell their interest in the trust so a creditor could collect?