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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Title holding trust questions - long followup question Posted by Gary C. on September 02, 2001 at 11:21 AM In Reply to: Re: Title holding trust questions posted by Ward-CA- on August 28, 2001 at 3:56 PM : : I put a property yesterday under contract subject-to the underlying loan. The owner is not in default but needs to move fast. I will have the owner place the property in a land trust naming my choice of trustee. Here are my questions: : : 1) Which of the following do I put as trustee? a) Gary C, b) Gary C of 'Mycorp, Inc.', c) 'Mycorp, Inc.', or d) other ...why? : : 2) Of the choices above (a,b,c or d), who do have the sellers reassign beneficial interest to?...why? : : The profits are going to my California corporation (aka 'Mycorp,Inc.'). My initial guess at the answers are 1) b and 2) b. : : Any other thoughts. : : Thanks, : : Gary C : =•=•=•=•=•=•=•=•=•=•=•=•= : Gary, it’s axiomatic that you wouldn’t ever want to be the trustee because that’s the one party to a title holding trust that’s exposed to public view. So given the choices you posit in #’s 1 & 2 here are my choices: : In # 1 — MyCorp, Inc. : In #2 — Gary I don’t understand what you mean by having “the seller’s reassign beneficial interest to” since the sellers will nominate you as their trustee right from the get go and have no need later on to “reassign” the trusteeship to you. : : Hope this helps. $$$$$$$$$$$$$$$$$$$$$$$$$$ Ward: This requires a bit more background. I understand the use of the trust is for the purposes of anonymity for any future personal lawsuits but it's also been used to disguise a publicly recorded title transfer to something other than an estate trust to fool the lender. I was taught in three separate real estate investor courses (including a lawyer) that the way to reduce the risk of having the loan called due on a ‘subject-to' transaction is to disguise a title transfer by placing the property into a land trust, name the buyer (or his corporation) as the trustee and the seller as the beneficiary. The trust is created and documented by a trust agreement between the trustee and beneficiary (seller). The property would be deeded to the trustee of the "Mr. Seller - 123 Address Trust" and recorded as such. To the lender, it would appear, by the use of a trustee and by the unique name of the trust, as if the seller placed the property into an estate planning trust. The beneficial interest is re-assigned by the seller to the buyer (me) off the public record. The benefit to this would be that if the lender wanted to see the trust agreement, it would show that the borrowers are the beneficiaries of the trust. They would not be aware of the reassignment of beneficial interest which is a separate contractual agreement that is not recorded. What I understand from your response to my post is that this is unnecessary. That I should just have the lender deed the property directly into a trust where the trustee is my corporation and me as the beneficiary. If I had to produce the trust agreement to the lender, they are sure to see that title has transferred and they may elect to call the loan due. Your thoughts? By the way, I've done the above (i.e. seller as beneficiary and reassign interest to me) on one previous transaction but I'm having trouble on this one with respect to the title insurance company's lawyer. The difference was that instead of naming me as trustee, I named my corporation as trustee. Two problems: 1) apparently, my corporation needs to be a licensed trustee in the state (California), and 2) I'm told by another investor/lawyer that I should have my properties that I obtain for my corporation, name me personally as the trustee and the owner (i.e. my corporation) as the beneficiary. What department in CA licenses trustees, and what do you think of this alternate trustee/beneficiary idea? Thanks, Gary Follow Ups: Re: More title holding trust Q/A Ward-CA- 7:59 PM, 09/02/01 (1) Re: More title holding trust Q/A Gary C. 11:01 PM, 09/04/01 (0) Post a Followup: Name : E-Mail : Subject : Comments: : : : I put a property yesterday under contract subject-to the underlying loan. The owner is not in default but needs to move fast. I will have the owner place the property in a land trust naming my choice of trustee. Here are my questions: : : : 1) Which of the following do I put as trustee? a) Gary C, b) Gary C of 'Mycorp, Inc.', c) 'Mycorp, Inc.', or d) other ...why? : : : 2) Of the choices above (a,b,c or d), who do have the sellers reassign beneficial interest to?...why? : : : The profits are going to my California corporation (aka 'Mycorp,Inc.'). My initial guess at the answers are 1) b and 2) b. : : : Any other thoughts. : : : Thanks, : : : Gary C : : =•=•=•=•=•=•=•=•=•=•=•=•= : : Gary, it’s axiomatic that you wouldn’t ever want to be the trustee because that’s the one party to a title holding trust that’s exposed to public view. So given the choices you posit in #’s 1 & 2 here are my choices: : : In # 1 — MyCorp, Inc. : : In #2 — Gary I don’t understand what you mean by having “the seller’s reassign beneficial interest to” since the sellers will nominate you as their trustee right from the get go and have no need later on to “reassign” the trusteeship to you. : : : : Hope this helps. : $$$$$$$$$$$$$$$$$$$$$$$$$$ : Ward: : This requires a bit more background. I understand the use of the trust is for the purposes of anonymity for any future personal lawsuits but it's also been used to disguise a publicly recorded title transfer to something other than an estate trust to fool the lender. I was taught in three separate real estate investor courses (including a lawyer) that the way to reduce the risk of having the loan called due on a ‘subject-to' transaction is to disguise a title transfer by placing the property into a land trust, name the buyer (or his corporation) as the trustee and the seller as the beneficiary. The trust is created and documented by a trust agreement between the trustee and beneficiary (seller). The property would be deeded to the trustee of the "Mr. Seller - 123 Address Trust" and recorded as such. To the lender, it would appear, by the use of a trustee and by the unique name of the trust, as if the seller placed the property into an estate planning trust. The beneficial interest is re-assigned by the seller to the buyer (me) off the public record. The benefit to this would be that if the lender wanted to see the trust agreement, it would show that the borrowers are the beneficiaries of the trust. They would not be aware of the reassignment of beneficial interest which is a separate contractual agreement that is not recorded. : What I understand from your response to my post is that this is unnecessary. That I should just have the lender deed the property directly into a trust where the trustee is my corporation and me as the beneficiary. If I had to produce the trust agreement to the lender, they are sure to see that title has transferred and they may elect to call the loan due. Your thoughts? : By the way, I've done the above (i.e. seller as beneficiary and reassign interest to me) on one previous transaction but I'm having trouble on this one with respect to the title insurance company's lawyer. The difference was that instead of naming me as trustee, I named my corporation as trustee. Two problems: 1) apparently, my corporation needs to be a licensed trustee in the state (California), and 2) I'm told by another investor/lawyer that I should have my properties that I obtain for my corporation, name me personally as the trustee and the owner (i.e. my corporation) as the beneficiary. What department in CA licenses trustees, and what do you think of this alternate trustee/beneficiary idea? : Thanks, : Gary Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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