Posted by B.L.Renfrow on April 08, 2000 at 21:50:37:
Just a couple things:
The SELLER transfers title into the land trust…you don’t “purchase in the name of your corporation.” This transfer is recorded and the lender may or may not be notified of the transfer. Regardless, under federal law, the lender cannot enforce the DOS as long as the seller retains a beneficial interest in the property.
Next, the seller transfers all or part of his beneficial interest to you (or your corporation). This transfer DOES violate the DOS, so it is done quietly and nothing is recorded.
If the seller were to then contact the lender, for some reason, and be stupid enough to explain to the lender how they had transferred beneficial interest in the property, the lender COULD enforce the DOS and call the loan due.
Whether the lender actually would is another issue. I know it has happened, but generally only if the lender isn’t being paid or some other problem arises. There are people who have called up the lender and told them exactly what was done, in an effort to “push the envelope” and see what would happen, and the lender couldn’t care less as long as they were paid. Nevertheless, the underlying loan remains in the seller’s name until it is paid off, so the seller would need to be aware of that.
Keep in mind that the only available public record would show the owner of the property as the land trust, and the trustee’s name. Your name would appear nowhere. That’s why anonymity is a big attraction of the land trust.