Posted by Stacy (AZ) on May 19, 1999 at 14:50:59:
Yes, deeding into a Land Trust is the preferred way, with him as the beneficiary and using your trustee. Then he should assign the beneficial interest to you (but don’t record this part).
The art of negotiating…there’s no pat answer, but here’s my opinion. I propose that deeding you the property is your going-in solution to this problem. Don’t mention any other solution, yet. Assure him that you will take over his problem, and make the payments on his underlying loan. You are in this to make a profit, and you would not be able to succeed if you let the loan go into default. It’s in your best interest, and his, to keep the loan current. If you had references, you could use them if he asked, but it sounds as though this is your first deal. Put the proposal on the table. If he doesn’t like it, ask him why, and try to come-up with solutions and reassurances for his issues. If he’s concerned that you don’t have anything to lose, you may even want to consider fronting him some money for his deeding to you. Depending how much you’re willing to risk on this deal, you may offer him $500 or $1000 up front if he deeds the property to you. This seems like a very small risk for all that equity.
But, maybe he just won’t do it. That’s fine, go to step 2. Tell him you’ll sign a wrap-mortgage or an AITD (whatever it takes in your state) for the amount of his note, and exact wrap. That way legal title doesn’t get to you until the underlying loan is paid off. Note, you could use a Land Contract if he insists, but this places you in a weaker position. Get the Deed signed and in escrow if you use the Land Contract.
Rod, keep in mind that this is just my opinion of how I would aproach the deal. There are other ways to do this, and it sounds (from your brief description) that this is a deal to go for. If I was you, and the deal is as good as it sounds, I’d get something signed ASAP.