Posted by Bud Branstetter on March 04, 2001 at 23:25:37:
My explanation is in this post; http://www.cal-equity.com/wwwboard/messages/2846.html
Bill Gatten can explain it in a thousand words. I’ll use one-concept.
Land Trusts vs. Pac Trusts - Posted by six
Posted by six on March 04, 2001 at 20:42:53:
What is the difference between land trusts and pac trusts?
Cost and complexity are the main differences. - Posted by April
Posted by April on March 05, 2001 at 24:05:58:
Six,
Pactrust keeps the seller on as a co-beneficiary to, in theory, protect against a DOS call, which has never happened to anybody that has kept loan payments current. And, if you want, it transfers tax benefits to the buyer for a higher monthly cash flow, however, the seller loses benefits gained by the buyer so it may be a wash.
A simple land trust on the other hand, has virtually the same DOS call protection (there hasn’t been a court case to support pactrusts claim of superior protection so it is all speculation at this point). Tax benefits can be transferred using a land contract, or, use a L/O if you want to keep the tax benefits. No need to carry the extra baggage of a co-beneficiary with a simple land trust, this creates less paperwork and less potential problems. Although pactrust effectively removes the seller from the picture by getting a power of attorney, it’s easy to imagine a disgruntled seller causing trouble if they were of such a mind, anybody can sue anybody for anything anytime.
Whatever you can do with a pactrust, you can do another way, no magic.
Many posters on this board that went to a pacturst seminar felt it was unnecessarily complex. After going to a pactrust seminar myself, I’m inclined to agree. I’m told that if you pay to become a network member there is a price reduction on many of the pactrust services, and, if you are willing and able to put one together yourself the cost is even less. After reviewing both land trust and pactrust, I feel land trust is a hands down winner, dollar-for-dollar, feature-for-feature and complexity-for-complexity. Opinions may vary.
Remember, all strategies in RE have pluses and minuses. For example?If a L/O tenant/buyer decides he wants to fight eviction he can, similarly, the infrastructure of a pactrust could be compromised if it is re-characterized as a partnership. If one of the principals in a transaction, any transaction, decides to cause trouble, they can, no matter how the deal is structured.
Happy investing.