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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Re: No, I don't think you're going to accomplish your goals...more ??'s Posted by zachary on July 30, 2003 at 7:52 AM In Reply to: No, I don't think you're going to accomplish your goals... posted by Ward-CA- on July 30, 2003 at 1:08 AM : : Ward, : : what are your thoughts on: : : -having seller deed to trust with me(or entity) as trustee : : -pay defaulting loan current : : -taking my profit + expenses in the form of a note and trust deed : : -sell house as trustee and collect profit/expenses as a "lender" : : Obviously the seller is still the beni., and can fire me as the trustee. this is the only down fall that I see. : : With that aside (meaning I'm looking for other problems that might be there....more concering with CA law) : : the reasons for doing this: : : 1. don't have to pay CA withholding tax (not INC'd yet.) : : 2. title does not pass thru my name : : 3. I want to sell to another investor at a discount inorder to move the property quickly. this one is a higher end home in a slow market...). : : I want to protect the other investor....they buy from me as trustee after foreclosure is stopped. : : : : the sellers are happy with what they will get, which is 50% of the net profit of the discounted price. they understand that it could take 2 years to sell at FMV and agree that we need to discount... : : ok, questions: : : 1. general thoughts on the idea?? : : 2. I have EPA signed stating they get 50% of re-sale price with rough guess of an amount. : : How do I go about doing what I stated above and still conform to the CA laws?? : : : : sorry for the rambling...hope this makes sence!! : : Zachary : =-=-=-==-=-=-=-=-=- : Zachary, : 1. You state you would sell the property out of the trust. That transaction WOULD be subject to the California’s withholding tax at the close of escrow, in the amount of 3.3% of your gross sales price. : 2. You state that title would not pass through your name. Well, if you’re the selling trustee the property’s title WILL go through your name as the trustee. And most people think that the trustee is the owner of the property (since that’s the way the living trust works). : 3. Your friend would only escape exposure to complicity with you in a lawsuit over this deal if he could show he was a (BFP) bona fide purchaser for value. But during the discovery process (a deposition) he would be asked his relationship with you prior to the sale and it would become evident he wasn’t a neutral, arm’s length buyer. So he wouldn’t have any protection either. : Hence, from my point of view, you haven’t accomplished your three goals in structuring the deal the way you’ve described. : : Hope this helps. _______________________________________________________ Ward, 1. if I sell out of trust with original sellers still as the benificiaries, how would the 3.3% state witholding apply? I would be getting paid thru a note/trust deed recorded before the final sale. Do you see a problem with this? I technically haven't purchased it this way... I've just become their trustee... 2. Are there issues with re-selling a t a discount? the seller has agreed that it could take 2 years to sell at FMV (some are even listed for over 1000 days!! Seller has agreed that inorder to sell quickly that I should sell at a discount... I can't and don't wnat to hold this one for 24 months at $2600 a month.... 3. They will end up getting over 50% (probably closer to 65% of the NET equity from the discounted re-sale. THey are willing to sign any "hold harmless agreement" stating that they are ok with the dis-counted resale value. any thoughts?? thanks for the info on the prior post Zachary Follow Ups: Post a Followup: Name : E-Mail : Subject : Comments: : : : Ward, : : : what are your thoughts on: : : : -having seller deed to trust with me(or entity) as trustee : : : -pay defaulting loan current : : : -taking my profit + expenses in the form of a note and trust deed : : : -sell house as trustee and collect profit/expenses as a "lender" : : : Obviously the seller is still the beni., and can fire me as the trustee. this is the only down fall that I see. : : : With that aside (meaning I'm looking for other problems that might be there....more concering with CA law) : : : the reasons for doing this: : : : 1. don't have to pay CA withholding tax (not INC'd yet.) : : : 2. title does not pass thru my name : : : 3. I want to sell to another investor at a discount inorder to move the property quickly. this one is a higher end home in a slow market...). : : : I want to protect the other investor....they buy from me as trustee after foreclosure is stopped. : : : : : : the sellers are happy with what they will get, which is 50% of the net profit of the discounted price. they understand that it could take 2 years to sell at FMV and agree that we need to discount... : : : ok, questions: : : : 1. general thoughts on the idea?? : : : 2. I have EPA signed stating they get 50% of re-sale price with rough guess of an amount. : : : How do I go about doing what I stated above and still conform to the CA laws?? : : : : : : sorry for the rambling...hope this makes sence!! : : : Zachary : : =-=-=-==-=-=-=-=-=- : : Zachary, : : 1. You state you would sell the property out of the trust. That transaction WOULD be subject to the California’s withholding tax at the close of escrow, in the amount of 3.3% of your gross sales price. : : 2. You state that title would not pass through your name. Well, if you’re the selling trustee the property’s title WILL go through your name as the trustee. And most people think that the trustee is the owner of the property (since that’s the way the living trust works). : : 3. Your friend would only escape exposure to complicity with you in a lawsuit over this deal if he could show he was a (BFP) bona fide purchaser for value. But during the discovery process (a deposition) he would be asked his relationship with you prior to the sale and it would become evident he wasn’t a neutral, arm’s length buyer. So he wouldn’t have any protection either. : : Hence, from my point of view, you haven’t accomplished your three goals in structuring the deal the way you’ve described. : : : : Hope this helps. : _______________________________________________________ : : Ward, : 1. if I sell out of trust with original sellers still as the benificiaries, how would the 3.3% state witholding apply? : I would be getting paid thru a note/trust deed recorded before the final sale. Do you see a problem with this? I technically haven't purchased it this way... I've just become their trustee... : 2. Are there issues with re-selling a t a discount? the seller has agreed that it could take 2 years to sell at FMV (some are even listed for over 1000 days!! : Seller has agreed that inorder to sell quickly that I should sell at a discount... : I can't and don't wnat to hold this one for 24 months at $2600 a month.... : 3. They will end up getting over 50% (probably closer to 65% of the NET equity from the discounted re-sale. : THey are willing to sign any "hold harmless agreement" stating that they are ok with the dis-counted resale value. : any thoughts?? : thanks for the info on the prior post : : Zachary 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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