It’s not easy to get an institutional lender to refinance your property when you hold title to it in an entity such as a trust or a corporation, etc. rather than in your individual name.
So the runaround most people are forced to employ is to temporarily switch the property’s title into their name and consummate the loan, and then afterward, once their loan escrow has closed, deed the property into their trust, etc.
And it’s that subsequent deeding that triggers the scrutiny of the county tax assessor’s office.
If your name doesn’t appear somewhere in the new grantee’s verbiage then its absence will lead the assessor to deduce that a sale has probably taken place. That supposition prompts them to write a letter to the grantee, requiring to see a copy of their trust (under the threat of a property tax re-assessment).
The reason they want a “look-see” of your trust agreement is to determine if the grantor of the trust is also the 100% owner/beneficiary of the trust. If so, then there’s been no sale of the property and hence no reason to call for a re-assessment.
But, if a different party is the beneficiary of the trust then that shift in the control of the property is considered the equivalent of a sale and thus cause for a re-assessment of the property’s tax base. Of course, in a depressed market you might not care if the property was re-assessed.
Fortunately, there’s another way to inform the assessor that no sale took place, without showing them your trust agreement…and that’s to show them a copy of a notarized Certification of Trust (COT), which discloses the identity of the trust’s beneficiary to be you.
And the easiest way to do it is to staple to the Preliminary Change of Ownership Report (PCOR) a copy of that specially drafted COT, wherein the items #2 (the Trustor’s identity), #3 (the Beneficiary’s identity), #8 (the Beneficiary’s SS#) and #9 (the Beneficiary is named as the recipient of any funds going to the trust) are highlighted, clearly showing there’s been no change in the control of the property.
Also, keep in mind that no outsider will ever get to see your PCOR or COT documents since they aren’t recorded or publicly archived anywhere.
So if you couple this maneuver with the non-disclosure of any documentary transfer tax info on the face of the deed (just declare a zero tax on a separate form that’s not recorded) you’ve successfully dropped out of public view as far as property ownership is concerned.
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