Sub-2 Concerns - Posted by Brian_wa

Real Estate Investing Real Estate Law
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Re: Sub-2 Concerns - Posted by whyK-CA

Posted by whyK-CA on December 27, 2005 at 12:59:16:

I never had to deal with this issue hopefully someone who did chime in. Earlier comment of yours suggested that they were suspecting the former owner still has interest in the property. Now they were provided with proof that the former owner no longer owns the property at the time the judgement was entered, yet they still do not agree to the fact. I do not know how you explained to them, but I feel they probably did not have the understanding of land trust or desire to understand it and easiest and safest thing for them to do was to insist on the judgement to be paid.

I had one title rep who flat out told me I screwed up with the trust. She was a senior rep. She said the trustee should be the same as trustor. I went huh? She said she and her husband just had their own residence put in to a trust for probate purpose by a lawyer, therefore she knew the right way. I did not bother explaining to her.

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Re: Sub-2 Concerns - Posted by WAREIA

Posted by WAREIA on December 27, 2005 at 19:55:27:

Theoretical Hell. Just do your darn Trusts right and call any and all Title Attorneys.

Don’t blame me for the garbage Trusts you write. You’ve got the best tool ever created for Real Estate Investing and you use half-assed.

It’s guys like you who give the ones doing Land Trusts right a bad rap.

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Re: Thats not the point & Michaela’s question - Posted by Joe Kaiser

Posted by Joe Kaiser on December 31, 2005 at 04:16:57:

No, that was the point, as far as I could tell. I sometimes but not often
close with my attorney as well. We get title insurance from the local
title company. What’s your point?

I’ve also reread the Michaela post and still don’t see her question.
Perhaps she can restate it so I can address it in a less than cryptic
fashion.

Joe

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And the  - Posted by Nike

Posted by Nike on January 01, 2006 at 21:44:52:

Your initial response hinted that you don’t know what you’re talking about–your follow-up response confirms it. Nothing in the facts Brian provided suggests that there’s a cause of action for slander of title yet you cling to the idea that it might exist.

The case you cited turned on two issues, neither of them relevant here: 1. theory of third party beneficiary of a contract between two parties and 2. cause of action in tort based on negligence regarding failure to complete the work within a reasonable time. Perhaps you provided the wrong case citation, or maybe you’re just confused?

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Re: Sub-2 Concerns - Posted by Not my experience

Posted by Not my experience on December 31, 2005 at 15:23:29:

I have been specifically told by several title companies in Washington that they WILL NOT as a matter of policy do transactions involving trusts period. That is why all the investors in the area use one specific escrow company. I have taken this matter to Title company regional vice presidents and discussed it at length and got nowhere. It would appear that your claims of filing the right paperwork is not necessarily based in reality.

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Re: Sub-2 Concerns - Posted by Brian_wa

Posted by Brian_wa on December 27, 2005 at 21:26:35:

I went into the archive and read a lot of things that you wrote. You are very knowledgeable and I could definitely use some help from you. I live in the state of Washington so I don’t know if things are different than in your state. However, over here, without title insurance, it’d be hard to sell a house. Title insurance companies have a lot of control and they oftentimes cherry pick to reduce their risk. What you’re saying may be true but I’m playing on their turf. So if you have some secrets that you’re willing to share, please let me know. I’m opened to any suggestion you may have… What I don’t appreciate is you telling me that investors like me are giving you guys a bad name. I’m just trying to learn here. I’m sure you used to be pretty ignorant somewhere along the line, too. So if you truly want to help me, offer some real advice or perhaps hook me up with your contacts. Otherwise, don’t tell me what I already know.

Thank you,

Brian

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Re: Sub-2 Concerns - Posted by Brian_wa

Posted by Brian_wa on December 27, 2005 at 21:02:15:

Can you tell me how one can do the trust correctly? I bought the “Get the Deed” course and followed the procedures accordingly.

Show me how to get this done properly then. I’m not claiming that I’m a guru. I just want to get it done the right way…

Brian

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Joe, you must be kidding, right? - Posted by Marc Donovan

Posted by Marc Donovan on December 31, 2005 at 08:16:54:

Obviously, Joe does not get it and I am not making any headway. Can anyone else help Joe here?

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Re: Sub-2 Concerns - Posted by WAREIA

Posted by WAREIA on January 01, 2006 at 13:49:09:

Using the proper documentation and process has nothing to do with a Title Companies willingness to do your transactions. Just like most stores have a sign on the door that reads, “No Shirt, No Shoes, No Service”.

It is certainly not illegal to use Trusts but a Title Company can refuse to service anyone it wants. The solution is to find a Title Company or Attorney who does. It has nothing to do with “the right paperwork”.

All it is is a lack of and an unwillingness to understand. There have been so many investors using bogus trusts and documentation that the word “Trust”, just like “Flipping” has a negative connotation to it to Realtors, Lenders, and Attorneys who don’t know ditty and Title Companies especially.

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Re: Sub-2 Concerns - Posted by WAREIA

Posted by WAREIA on December 27, 2005 at 22:58:22:

Brian, I appoligize and understand your frustration. I have done this for 5 years and have had more than a few creditors attempt to get to a property once it was vested with a proper Trustee.

Your Trustee and your Title Company should be able to tell a Creditor to Pound Sand. It is beyond me how a Creditor could legally abtain a Lien and Judgment on a property that is no longer legally and equitably owned by the seller. As long as the title was vested with the Trustee and recorded, an attachment or judgment against the property cannot be made. Even if the Creditor was the IRS they could still not get to the property. However they could put you in jail for fraud but never get to the property.

Again, an attachment or Charging Order cannot be made against “Beneficial Interest”. It is made against Equitable Interest and you can have one without the other. A Seller can have Beneficial Interest but no Equitable Interest and the Seller’s Beneficial Interest in my deals is to be relinquished to me upon termination of the Trust. There is nothing in most cases for a Creditor to get.

Brian, you have to understand where I’m coming from. I talk to my Title Attorney everyday. And everyday he tells me new horror stories of how someone bought a course that told them to use a Land Trust. He shows me these hidious documents and laughs. My State Dept. of Real Estate is now warning Realtors, Lenders and Title companies about these bogus documents and hairbrained schemes using Land Trusts. I’ve spent hours in front of State Investigators assuring them that these documents are not the ones I use or the methods I use.

I don’t want to lumped into “Investors” who are not forming or using Land Trusts correctly.

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Re: Sub-2 Concerns - Posted by JohnBoy

Posted by JohnBoy on December 27, 2005 at 21:55:22:

What he is referring to is using a PACtrust. That involves leaving the seller owning at least 10% of the beneficial interest of the trust. The only purpose this serves is to avoid the DOSC. Nothing more. If you had done it that way the seller would have been entitles to $13,900 of the proceeds which is 10% of the selling price. The title company would have taken the $8,500 from his share of the proceeds leaving the seller with $5,400 left over. Which is $5,400 more than you had to pay for his lien.

The purpose of having multiple beneficiaries is to prevent the asset from being taken by a creditor. If more than one party is a beneficiary of the trust a creditor can not force the sale of the asset because the other beneficiaries have nothing to do with the judgement owed. Where if there is only one beneficiary and that beneficiary is sued a creditor could force the sale of any assets owned by any trust he is a sole beneficiary of.

So in your case no of this would have prevented what happened here. It would have been more inclined to of happened had your seller remained a beneficiary since the judgement was against him. The judgement could have been attached against his beneficial interest of the trust. The creditor could never force the sale of the property to collect on the judgement. But they sure as heck can attach his beneficial interest and collect when you ever sold the property.

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Re: Joe, you must be kidding, right? - Posted by michaela-ATL

Posted by michaela-ATL on December 31, 2005 at 11:44:25:

Marc,

thanks for trying to find out the same, that I was. Unfortunately, I really don’t know how to word it any differently than I have. I still think what I’m asking is pretty straight forward, but maybe I’m speaking German without realizing :wink:

Michaela

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Re: Sub-2 Concerns - Posted by Brian_wa

Posted by Brian_wa on December 27, 2005 at 23:03:55:

Can I buy these forms from you? I’ll get them checked out with my attorney before using of course. Do you also work with a national title company that could help with this? I’d like to use your title attorney if it’s possible.

Please let me know…

Brian

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Re: Sub-2 Concerns - Posted by WAREIA

Posted by WAREIA on December 27, 2005 at 22:32:57:

I never referred to a PACTrust. Leaving the Seller as a Beneficiary in the Trust does more than just avoid the Lender’s DOS and it does not entitle the Seller to 10% of the of the proceeds of the “selling” price. If you want to give it to them fine, but it does not entitle them to it. I do like your thinking with regard to the judgment coming out of proceeds to the Seller/Settlor.

With the proper recording and documentation of the Trust it would have absolutely prevented a lien or judgment on the property and you cannot get a judgment on someones personal interest in a trust. It would have to be in the form of a charging order. A Beneficial Interest is not the same as an Equitable Interst. You can’t attach or charge against Beneficial Interest because it has no value and is of a personal nature. A Creditor cannot attach or lien personal property.

If in fact a Seller who remains a beneficiary holds any Beneficial Interest, that interest is surrendered at termination of the Trust to one or more of the other beneficiaries.

The only thing a Creditor can do is get a charging order against any Equitable Interest the Seller, now Settlor, MAY have in the Trust. In order to do that the entity that actually succeeds in getting the order is required to pay the taxes of the Settlor until such time as the Settlor pays off the order.

It is also not an attachment. If and when the property is sold it is the sole responsibility of the Settlor to tell whomever has the order that the Settlor took a distribution. It is not the responsibility of the other Beneficiaries or the Trustee.

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Re: Joe, you must be kidding, right? - Posted by Joe Kaiser

Posted by Joe Kaiser on January 01, 2006 at 10:58:25:

No, Michaela, your English is just fine. I didn’t think it would be that
difficult to formulate a question.

You suggest a multifaceted topic (one I"m currently creating a 3 day
seminar to explain), and a broad, generalized “huh?” sort of response.
Unfortunately, that doesn’t really give me something specific to talk
about or help you with and I’d need you to put a finer point on it if you
want me to address it.

Otherwise, it’s a 3 day exercise that doesn’t read particularly well on an
internet forum page.

So what’s the question?

Joe

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You are spouting crud here - Posted by Marc Donovan

Posted by Marc Donovan on December 28, 2005 at 07:59:52:

I have a lot of problems with your advice here.

“…With the proper recording and documentation of the Trust it would have absolutely prevented a lien or judgment on the property…”

Wrong, if the judgement was recorded before the trustees deed, it attaches to the property - trust or no trust. If it was recorded after the deed, it does not attach - trust or no trust.

“…and you cannot get a judgment on someones personal interest in a trust…”

You do not get judgements against things. You get judgements against entities. After that you can attach and sell whatever that entity owns, personal and real property.

“… A Beneficial Interest is not the same as an Equitable Interst. You can’t attach or charge against Beneficial Interest because it has no value and is of a personal nature. A Creditor cannot attach or lien personal property…”

Who told you that? Beneficial interest is personal property. Just like your car and you computer. Do you really think they are exempt from creditors? Which course have you been reading?

“…The only thing a Creditor can do is get a charging order against any Equitable Interest the Seller, now Settlor, MAY have in the Trust…”

This is not due to the trust. It is entirely due to the partnership agreement between the beneficiaries. Again if the seller had the judgement recorded against him prior to the recording of the deed, all of this is bunk. It attaches and they can foreclose on the property, does not matter what kind of trust you have. And if it was recorded after, having the seller as a partner has just added to your problems.

Giving this kind of advice is wreckless since a lot of people will take it as truth and waste their time and money with it.

Brian has asked you for some specifics and all you have posted in response is this nonsense.

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Re: Sub-2 Concerns - Posted by Brian_wa

Posted by Brian_wa on December 27, 2005 at 22:36:12:

Try convincing that to the title company…

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Re: Joe, you must be kidding, right? - Posted by michaela-ATL

Posted by michaela-ATL on January 01, 2006 at 11:55:23:

Joe,

my question was very clear: How can you claim, that only
deals, that give you 10x your investment are deals? And
obviously that includes other people’s money, since you coundted that in in your first response to the asker.

That would mean a 100k house is only worth buying, if you can get it for 10K.

You may have one way of doing it that way on some of the sub-to deals (but then event hose include other people’s money, int he form of a mortgage), but to just
broadly eliminate any deal, that doesn’t return you a 10-fold profit, by saying, they’re not worth doing, you’d eliminate most real estate facets like: rehabs, wholesales, notes, pre-foreclosures, taxdeeds etc. Very very few of them wll be able to be bought for 10% of value.

Michaela

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Re: You are spouting crud here - Posted by WAREIA

Posted by WAREIA on December 28, 2005 at 13:20:14:

“Wrong, if the judgement was recorded before the trustees deed, it attaches to the property - trust or no trust”.

Granted, no problem there.

Yes you can get a Charging Order not a Judgment or Lien against personal interest in the Trust, however your Beneficial Interest has no value only your Equitable Interest IF you have any. Charging Orders are very rare because any Attorney for a Creditor knows it may take years if at all to collect. In the mean time the Creditor pays the taxes.

“Again IF the seller had the judgement recorded against him prior to the recording of the deed, all of this is bunk”.

“IF the judgment was recorded prior”

Again, no argument here.

How much more specific can I get then call a GOOD Title Attorney. That was your advice too.

I don’t know where he lives, how the heck should I know a Title Company or Attorney in his area.

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waste of time - Posted by Innovator

Posted by Innovator on December 28, 2005 at 24:42:56:

WAREIA,

You’re wasting your time. These guys argue with guys that have done it. We’ve done dozens in the last 8 months. They ask for help, but if you tell them where to get the info they need you are accused of advertising. And they won’t E-mail you privately so you can help them because they don’t think you know what you are talking about (because you won’t find our program advertised on CRE). I gave up on them a long time ago. They don’t want to learn how to do deals all they do is argue that they can’t be done. I advise you to do deals, make lots of money and quit wasting your time flogging a dead horse!