Posted by Jim IL on November 26, 1999 at 24:07:55:
Paul,
If this was a deal I was looking at, I’d handle it like this;
Have the seller place the home into a land trust, naming himself as beneficial interest and someone you choose as trustee. This is done by filling out a “Warranty deed to trustee”, and also a trust agreement. The trust agreement stays with you, away from the public view, and the warranty deed gets recorded.
Then have the seller sign an “assignment of beneficial interest” in the trust to you.
Next, you peform all the due diligence needed. Verify everything, as in, loan balance, value, and make sure the title is clear. As part of the package you are preparing and having the seller sign, include a few things, like a “CYA letter” stating that you are taking title to the property “subject to” the existing loan, but are not assuming any liability for that loan. It will stay in his name, and that he is aware of the possibility of the lender calling the loan due.
Also have the seller sign a letter you prepare to the lender and his property insurance company advising them that he is placing the home into a trust and that all further information, billing statements and anything else pertinent are to to mailed to the trustee at there address.
I also like to add to that list a letter from the seller that gives authorization to release information on the loan. You can use this to fax to the lender NOW and gather the needed info.
Then if all your due diligence comes back that this is a good deal, send the needed funds to the lender to bring it all current.
And, now the home is yours.
If something truns up making this not a good deal, you have only wasted a little time and paper.
Read some of the articles posted here and on www.legalwiz.com about “beating the due on sale” and that will also outline this type of a deal for you, WAY better than I just did.
And of course there are other issues here as well. such as, “Title insurance” , a purchase and sale agreement (contract between you and the seller), and whether or not you will do all this yourself or have an actual closing?
Some people here suggest a closing, and others do not. It is really up to you, and what you are willing to risk or spend on the deal, since closings do cost a little money.
Hope this helps,
Jim IL