Re: My Lawyer says fraud ? - Posted by Bill Gatten
Posted by Bill Gatten on December 12, 1998 at 19:50:31:
The Dreaded Due on Sale clause doesn’t say what the attorney THINKS it does in the first place (the D.O.S. clause being good or bad or neutral). What it says is UNLESS PROHIBITED BY LAW, the lender has a right to…
Well it IS prohibited by law for a lender to take exception to the seller’s putting the property in a living trust (such as a title-holding land trust), and doing what is tantamount to a legally shielded AITD (Wrap) by making you the Remainder Agent or a co-beneficiary of that trust (for a 50%, 80% or 90% beneficiary interest, with an agreement to forfeit his beneficiary interest to you upon disposition of the property, in consideration of your fullfillment of all contract provisions).
If you want to get the deal, suggest that you’ll help the lender put the property into his own trust in his own name, and then merely make you a co-beneficiary in that trust (that gives you 100% of the tax write-off;, 100% of the use, occupancy, possession, equity build-up, principal reduction, right to rents and all sale profits… and any other of the rights under the “Fee Simple Bundle of Rights” you can think of). This way the seller never has to take any chances with you; and you don’t have to take any chances with the seller. The property is henceforth protected from liens, suits judgments, divorce actions or claims, bankruptcies or anything else you can think of, including state and/or IRS tax liens… and the Due-on-Sale Clause is no longer an issue.
As far as the jerk attorney’s suggestion that a Lease Option would be better with reference to the Due-on-Sale Clause, that’s ridiculous! He just wants to make a profit on doing it for you (…and you end up with no tax write-off). He might consider reading the law (the Garn St. Germain ACT, the FDIRA 1982): it clearly states than any lease for more than 3 years OR ANY LEASE WHICH CONTAINS AN OPTION TO PUCHASE is valid grounds for a lender’s accelerating its loan (i.e., IT VIOLATES THE DUE-ON-SALE CLAUSE).
Phew!! These legal beagles who graduated from Dewlap Holler U., and who were sworn in over their fourth Pina Collada just p…tick me off!!