Not sure how the actual wording is in the AZ law, but it would seem listing you as the beneficial interest holder in the original trust is neither a transfer or assignment of the interest, since it has never existed before. Maybe i’m reading to much into it but it appears to me someone else would have to hold beneficial interest first in order to transfer or assign the interest. Listing you as 1st B.I. holder would seem to me like deeding a property directly to you.
Think i talked to you once before about being in one of the few states that require an assignment of beneficial interest to be recorded to be legal. In reference to your subject to and CFD sale below, are you having the seller list you/your corp as beneficial interset holder on the original land trust without doing an assignment? Anyone else do this?
Posted by Stacy (AZ) on January 22, 2001 at 13:07:42:
David-
Just to be clear…my offer has not been accepted on the deal I mentioned below. No word yet.
But, to answer your question, I’ll have the seller deed it to a trust using my trustee, and listing the seller as beneficiary, and record it. Then, I’ll follow-up with an assignment of beneficial interest to me.
Now, I’ll be at a decision point. As I work the sell side of the deal, if I think I’ll be holding the property for more than a few months, I’ll probably record the assignment. If it looks like I’ll be holding for a short time, I’ll probably not record the assignment. I like to have a separate assignment to keep my options open as I try to sell. Of course, as soon as it’s recorded, I know the lender can find out I’m the beneficiary. So, I know I have an added risk of the loan being called due. But I think the odds are against it. If it happens, I’ll refinance.
AZ statutes make it more risky to not record the assignment, as you know. The sale can be nullified by the seller if the assignment is not recorded. But here’s the deal. What are the odds that a seller would even know he has this option? I’d be surprised if you could even find an Arizona attorney who knows this is possible. But, the risk is still there. You have to decide for yourself if the risk of the lender calling the loan due, or the seller nullifying the sale is more of a concern for you.
The only reasons I even bother with using land trusts here in AZ are 1) it’s simple and free, and 2) it “may” help cloak the sale in the public records, just by making the chain of title more complex. I don’t have a recommendation, though. AZ law makes it difficult.
Posted by JohnBoy on January 22, 2001 at 22:08:00:
In that case then why not just have the seller deed into a trust naming you as the beneficiary from the beginning? No assignment to record and unless you show the lender the trust agreement they would never know.
Sounds like fooling around with assigning the beneficial interest in the trust would just be a waiste of time and an added step that ends up revealing yourself as the new beneficiary. Why bother?
Posted by Stacy (AZ) on January 23, 2001 at 10:10:42:
Hi John-
It’s AZ law that any transfer of beneficial interest in a property must show the name(s) of the beneficiaries, and must be recorded. If it doesn’t, the seller has the option of nullifying the transfer right out from under the buyer. So, the initial deed to trust would show me as the beneficiary, as would a separate transfer document. No benefit to doing it on the initial deed to trust.
At least with a separate transfer document, I can decide later if I want my name in the public records as beneficiary, depending on where I think my greater risk is going to be on a particular sale. It’s no bother…the document is signed and notarized at the same time the initial deed is signed.
As you can see, AZ law kinda takes the pizzazz out of using a land trust for cloaking a transfer.