Buying "Subject To" from Trustee

[brymetime]

All,

John Doe, Trustee of the John and Jane Doe Trust Estate is on the property title for 111 Main St., Florida. He may want to sell me his Florida townhouse "subject to" the existing financing.

I reviewed the Mortgage recorded online at the Clerk of Courts. John Doe is the Borrower on the Loan. "Transfer of the Property or a Beneficial Interest in Borrower" section of the Mortgage Note states, "...If...Property...is sold or transferred...Lender MAY require immediate payment in full of all sums secured by this Security Instrument."

Should I be able to buy this FL townhouse "subject to" the existing financing?

Thanks!

Ryan

[Invstr73]

All,

John Doe, Trustee of the John and Jane Doe Trust Estate is on the property title for 111 Main St., Florida. He may want to sell me his Florida townhouse "subject to" the existing financing.

I reviewed the Mortgage recorded online at the Clerk of Courts. John Doe is the Borrower on the Loan. "Transfer of the Property or a Beneficial Interest in Borrower" section of the Mortgage Note states, "...If...Property...is sold or transferred...Lender MAY require immediate payment in full of all sums secured by this Security Instrument."

Should I be able to buy this FL townhouse "subject to" the existing financing?

Thanks!

Ryan


In short........YES

Almost every mortgage is written with that verbiage -- "If the property is sold or transferred.. lender may require payment in full". This is otherwise known as a Due on sale clause.

Is it possible they could call it due? YES

Will they call it due, if they are receiving timely payments each month? HELL NO!

If the benefical interest is transferred, then they won't see that anyways. The only thing that will change that they can see is who becomes the Trustee.

I don't claim to be an expert at Subject-to. One of my partner has done quite a few. I'm still learning all the aspects of it. Jim or others on the board may be able to shed additional light on this for you as well. Hope this helps

[Debbie]

What type of trust are you referring to?

If it's Land Trust, lenders will assume it's just estate trust hence does not affect the DOS clause.

[brymetime]

What type of trust are you referring to?


The full name is "John and Jane Doe Trust Estate." I don't know if this answers the question.

[Invstr73]

John Doe is the Borrower on the Loan.

If there is a borrower that would be referring to a loan. If it's a loan recorded in clerk of the circuit court it's generally against real property.

[KCHomebuyers]

Just my $0.02, but if the owner of record is "John and Jane Doe Trust Estate", then it sounds as if John/Jane Doe have already done a little asset planning and put the property into a trust.

What you'll need here is some due diligence. You've already checked out the mortgage, and I'm assuming done a title peek to make sure no other liens exist on the property.

What you'll need next is a copy of the trust documents that they used to create that trust, as well as a copy of the deed that transfered title into the trust. You should be able to get a copy of the deed at the courthouse.

After all that checked out, you should easily be able to buy subject to by having the beneficiaries assign the interest in the trust to you company, and also execute an assignment of trustee to name you as trustee of teh trust. That'll lock up the property in your control, and the bank will never see any of that.

there are a few other documents to take care of, such as the notice of trustee, change of address, etc that you'll need to send to the bank, but that's pretty easy stuff. Just email if you need help with some of the docs.

[brymetime]

What you'll need here is some due diligence. You've already checked out the mortgage, and I'm assuming done a title peek to make sure no other liens exist on the property.

What you'll need next is a copy of the trust documents that they used to create that trust, as well as a copy of the deed that transfered title into the trust. You should be able to get a copy of the deed at the courthouse.


Thanks! Very helpful.


After all that checked out, you should easily be able to buy subject to by having the beneficiaries assign the interest in the trust to you company, and also execute an assignment of trustee to name you as trustee of teh trust. That'll lock up the property in your control, and the bank will never see any of that.


I forgot to mention that the same Trust owns several properties. It doesn't sound as if I would still be able to do what you described above, could I?


there are a few other documents to take care of, such as the notice of trustee, change of address, etc that you'll need to send to the bank, but that's pretty easy stuff. Just email if you need help with some of the docs.

I am sending you an e-mail.

Thanks,

Ryan

[Jim FL]

Ryan,
Ah, seems a whole lot of advice on things to do is being thrown around here, and frankly, most of it is wrong.

Yes, you CAN buy the "Fl-townhome" subject to the existing financing.
You can buy anything this way, when the seller is willing.

Now, since the property is held in a trust, along with other properties, as far as you know......the existing trust means nothing to you.

when you BUY this property, the existing trustee, at the direction of the beneficial interest holder(s) of that trust, will deed the "Fl-Townhome" to you.

How you take title is up to you, and I would advise taking title in another trust...........which is simple and can be done at your closing attny or title companies office when you close with the seller.

By the way, you don't need copies of the sellers trust docs, and honestly, IF I was the seller and you asked me for them.............I'd still be laughing.

To buy something subject to, as I teach/discuss, it does not matter who/how/what holds title as the seller......just that the correct party signs the deed to me or my entity when we close.

HTH,
Jim FL

[Jim FL]

That could be but I was reading a article over at the Real Estate Field Guide today and it makes a good case for why a buyer should insist on seeing them and including them in the escrow instructions.


Seriously,
why?
Why on earth would someone I was selling a property to, need to see the trust agreement that sets up the entity I use to hold title?
As long as title is clear, the structure of my entity does not matter one bit to the buyer of a property owned by that entity.

If I buy an REO from a lender, shall we also look at their incorp. paper work, and entity structure?


So, "Field guide'? Don't subscribe, nor will I.
Tim seems to offer good info here, and his other things I've seen but not paid for.
My posts here, are based on experience, in real live deals that we close all the time.
So, to simply tell me trust docs need to be reviewed because some guide says so......doesn't cut it..........especially in light of the dozens of properties we've sold subject to, which were held in trust.

My two cents, keep the change,
Jim FL

[Jim FL]

Tim,
with all due respect:
You said:
"The problem with trusts, especially self drafted ones, is they no longer provide clean verifiable and insurable at standard rates title."

My question, is, since when?
Since I just closed TWO last week, where title was fully insured at sale, and all the trustee had to do was attend close, sign the docs, and leave with our profit being wired to our account.

I 'self draft' trusts all the time, have for years, and have NEVER had a problem closing a sale when its time to exit.

By the way, I know what Ken was talking about, as I was as well.
I SELL properties, which have title held in trust, with the buyers buying for cash, with loans, and yes, sometimes, subject to.
NEVER had a problem getting title insured, and don't really see any issues pending.
Then again, I only close a few dozen per year, could be different for everyone else.

And no, twas not a slam on your field guide, just get tired of folks citing things and having it appear as though they are gospel, when I know different, again, from experience....in the field, daily.

I'm sure you offer good content (seen some posted), hence your prescence here. Dan doesn't let in schmoes.

Remember, posting doesn't allow for body language etc, so if my post reads short, it was meant for expediency, nothing more.

Opinions are like, er, um, elbows, we all have them.
Thankfully, my title attny who helps me get paid agrees with me. :-),

Take care,
Jim FL

P.S. There is one doc signed at close, an affidavit, when a title held in trust is sold......stating the trust is in effect, and that the trustee is acting on the proper authority, etc. Perhaps this might be missing from those who seem to think they have to show trust docs at close.......which again, I think is absurd........i know, i know, to each their own.

[DanS]

This is my one and only post here on this or any other subject.

Jim, I don’t know you or anything about how you do business and to be blunt, I don’t have any desire to know. I am the author of the article KenD referenced. I have written most of the articles at the field guide relating to trusts and their use by investors. Like you, I don’t like to see factually incorrect information held up as gospel.

I am not interested in debating this with you or anyone else. My only reason for this post is to clarify a couple of things related to the part of the article Ken touched on in his post and your response.

The use of a trust can cloud title. Let us not be coy about this point. It is the reason gurus tell their students to use them. It clouds a transfer from the seller to an investor by way of transferring ‘beneficial interest’ to reduce the chance of a DOSC problem. To claim transparent title chain when it passes through an entity created by a document tucked away in an investor’s desk drawer at home is preposterous on its face. Trusts do nothing to limit liability in any substantive way.

When a trust has a third party trustee like a bank or lawyer it is of no issue because they have a true fiduciary duty to act in accordance with the instructions in the trust document and they are only protected from actions against them if they act in accordance with the instructions of the trust documents and written instructions from the beneficiaries *if* the trust allows the beneficiaries to issue binding instructions.

When these third party trustees have professional licenses, or registrations and liability or malpractice insurance it is of no issue because there is protection for someone buying a property from a trust structured that way.

If the trustee is not a true third party, but perhaps also the beneficiary, there is a risk of potential problems with title chain and title companies know this. Unless the title company or the buyer know the trust allows the trustee to accept instructions from the beneficiary to dispose of assets in the manner represented in the transaction under consideration, the title can cloud at any point after that transaction if anyone with a current or future beneficial interest claims the transfer violated the terms of the trust.

I had a client come to me in 1998 with a title problem. They purchased a home from a trust in 1991 and everything seemed fine. They bought using owner financing and did not get title insurance because the seller refused to give the title company a copy of the trust documents and the title company adjusted the rate to reflect the real risk.

The trustee was the investor who sold them the home and after his death in 1997 the successor trustee claimed he transferred title contrary to the purpose and instructions of the trust. They further claimed when the transaction happened he was in the early stages of Alzheimer’s disease. It was a mess. I referred them to someone who was able to fight off the successor trustee claims but the title still has problems. When they tried to sell in 2002 no title company would insure the title at standard rates.

Is this an exceptional example? Yes, it is.

You said you have done many of these and had no problems. You should add the word ‘yet’ to the end of your claim because the riskiest of all positions to be in is one where you have been doing something for a long period of time and had no problems.

If you want to know why I prefer Tim’s Real Estate Field Guide to ‘caveat lector’ sites like this, perhaps Tim will post a link to the testimonial I wrote for him almost two years ago.

Dan

[Jim FL]

This is my one and only post here on this or any other subject.

Jim, I don’t know you or anything about how you do business and to be blunt, I don’t have any desire to know. I am the author of the article KenD referenced. I have written most of the articles at the field guide relating to trusts and their use by investors. Like you, I don’t like to see factually incorrect information held up as gospel.

I am not interested in debating this with you or anyone else. My only reason for this post is to clarify a couple of things related to the part of the article Ken touched on in his post and your response.

The use of a trust can cloud title. Let us not be coy about this point. It is the reason gurus tell their students to use them. It clouds a transfer from the seller to an investor by way of transferring ‘beneficial interest’ to reduce the chance of a DOSC problem. To claim transparent title chain when it passes through an entity created by a document tucked away in an investor’s desk drawer at home is preposterous on its face. Trusts do nothing to limit liability in any substantive way.

When a trust has a third party trustee like a bank or lawyer it is of no issue because they have a true fiduciary duty to act in accordance with the instructions in the trust document and they are only protected from actions against them if they act in accordance with the instructions of the trust documents and written instructions from the beneficiaries *if* the trust allows the beneficiaries to issue binding instructions.

When these third party trustees have professional licenses, or registrations and liability or malpractice insurance it is of no issue because there is protection for someone buying a property from a trust structured that way.

If the trustee is not a true third party, but perhaps also the beneficiary, there is a risk of potential problems with title chain and title companies know this. Unless the title company or the buyer know the trust allows the trustee to accept instructions from the beneficiary to dispose of assets in the manner represented in the transaction under consideration, the title can cloud at any point after that transaction if anyone with a current or future beneficial interest claims the transfer violated the terms of the trust.

I had a client come to me in 1998 with a title problem. They purchased a home from a trust in 1991 and everything seemed fine. They bought using owner financing and did not get title insurance because the seller refused to give the title company a copy of the trust documents and the title company adjusted the rate to reflect the real risk.

The trustee was the investor who sold them the home and after his death in 1997 the successor trustee claimed he transferred title contrary to the purpose and instructions of the trust. They further claimed when the transaction happened he was in the early stages of Alzheimer’s disease. It was a mess. I referred them to someone who was able to fight off the successor trustee claims but the title still has problems. When they tried to sell in 2002 no title company would insure the title at standard rates.

Is this an exceptional example? Yes, it is.

You said you have done many of these and had no problems. You should add the word ‘yet’ to the end of your claim because the riskiest of all positions to be in is one where you have been doing something for a long period of time and had no problems.

If you want to know why I prefer Tim’s Real Estate Field Guide to ‘caveat lector’ sites like this, perhaps Tim will post a link to the testimonial I wrote for him almost two years ago.

Dan


alrighty then sparky............Field Guide?
gimme a break.

Adding the word 'yet'? Don't think so.

Guess what?
In your example, I'd have simply moved title companies, and solved the problem.
But, I DO NOT want to debate you folks, no point and obviously a waste of time.

"The use of a trust can cloud title. Let us not be coy about this point. It is the reason gurus tell their students to use them."

Ah, what? Clouds title?
Nope, not according to my title company.
When a property is held in trust, as the so called 'gurus' you mention in your post suggest, it simply means the trust holds title.
Now, who owns the trust, sure, that's anonymous, and will remain so.
Liability protection?
Who mentioned that?

My beef with the whole thing, was these over analyzing and telling folks they have to show their trust docs or title is not insurable.
This is just not correct.........don't care what guide you write for, law school attended, etc.

I can easily find you a few dozen lawyers who attended law school, have practiced law for years.......heck, lets go a step further, they can even be RE attny's..........and I can STILL easily find dozens that will claim buying subject to, taking title in a trust is 'illegal' or cannot be done.
And they'll back it up with all kinds of analytical legalese.
Does this make them right?

In business, as in life, one can ALWAYS find someone to tell them something cannot be done.

Because I prefer to get things done, I avoid folks like that.

Again though, what would I know, with the deal we closed yesterday afternoon (a house we bought subject to, held in trust, then sold retail, 3 months later), makes this months profit at nearly $200k, $150k in CASH, and about $45-$48k in equity.

So, danS, I don’t know you or anything about how you do business and to be blunt, I don’t have any desire to know.
I'd rather deal with folks who know how to get things done, and get paid, instead of those telling me 'this cannot be done'.
Had I followed advice like that some 10 years ago, the last 500 or so deals just might not have happened.

Have a nice day,
Jim FL

[SPIVALAW]

This is my one and only post here on this or any other subject.

‘caveat lector’ sites like this, Dan

Darn wont be back?

When you quote latin it turns me on.

[stallingsorg]

too many peaches and too many navel oranges!!!!! you get my drift partner!!!! shown me authors, shown me gut partners!!! what do you have that i don't!!! are you the :pa:

[stallingsorg]

your post made absolutely no sense to me that because you refused to understand, you refused to acknowleged and you are a pretender. you see "peaches" are bunches of georgia boys!!!! you got it!!! and navel oranges are bunches of florida boys!!!. you got it. so, what is the problem???

Do you understand what you wrote? yes i do!!!!! you see, if i asked do you understand what you wrote? so you see? please don't waste my time with your comment and statement per say. God Bless You.

[Debbie]

Time out!

I appreciate that there has been no ugly words but the insinuations are there.

For the most parts, I understood each views but unfortunately they can not be explained well via postings. If all of us were gathering at a table, there'd be less misunderstandings.

Off my soapbox and thanx for listening.

[Debbie]

This is my one and only post here on this or any other subject.
Dan

Dan,

Welcome to the Magic Bullets Fambly! :SM128:

I hope to persuade you to continue posting here at Magic Bullets.

I have read your article at Tim's website. I must say that I enjoyed reading it.

I would very much see you post here because it is obvious you have great wealth of knowledge. I, for one, certainly can benefit learning from you.

You see, that is the whole purpose of this Magic Bullets website--learning from each other to explore various roads of Real Estate. For free.

So, I am asking you--pretty please with chocolate fudge ice cream on top, to give us your knowledge by continuing to post here at Magic Bullets.

[Debbie]

Debbie, Tim says you are a field guide member. Why not ask Dan there because I doubt he will see it here.

Good idea!

I'll forward my message to Dan.

Thanx Ken!

[Jason2020]

Jim FL I am really hoping you can help me here.

I was cruising the internet a while back because I was faced with the exact scenerio here. I have a house I bought sub2 and it is held in a trust. I am selling now and the closing agent asked for the trust documents. After reading this thread I was confident in my, "No, you can't have them" answer but now I think I have a big problem.

Today I was given notice that my tenant buyer will not be closing and since the closing could not take place because of my lack of cooperation their new lawyer is now demanding I return the option fee from 18 months ago and the amount over market rent we were crediting to the sale for the last 18 months. I offered to get my attorney to do the closing but was told the lender and buyer determines who closes the loan, not the seller.

How badly am I screwed?

Don't get the wrong idea. I am not trying to blame anyone this is completely my fault but if you have run into a similar thing and have any wisdom to offer I'd sure like to hear it. FWIW, my lawyer told me about 30 minutes ago I am screwed and should be glad all they want is their option fee and rent credit back. He is recommending I get them a check asap.

[KCHomebuyers]

Jason,
Sorry, I'm not Jim (I don't have his experience), and I ain't a lawyer. However, I would suggest that you see what it would take to get the tenant to go ahead and close if they'll still consider it. It sounds to me like there was a disconnect betweent he closing agent, you, and the tenant and tempers flared.

When we do short sales, we fill out an almost identical set of documents like when we do sub-2's. That's the deed into trust, the trust, etc. When we flip the short sales, I put all our docs (yes, including the trust) on disc and give them to the title company.

These guys have worked with investors before and are knowledgeable. They have the docs for their own records, and full document disclosure makes everything easy and fast. when they do the simultaneous close, they still don't record the trust doc, and we've never had any ill effects from letting them see the trust at closing time.

The trust doc (and assignment of beneficial interest) show ownership in the property, give you rights as trustee to sell the property etc. I'm sure the closing agent was needing to verify that info. Since the mortgage is still in the original owner's name, then you can understand why they'd want to know why you're able to sell the property.

I suppose that giving them copies of the purchase and sales agreement between you and the original owner should have been enough, but a lot of closing agents and lenders are ignorant or investing practices or leery of investors in general.

If it were me, and I was looking at a nice fat payoff on the property, I'd let them see me nekkid if they asked. I would also bet that if you end up getting dragged into a suit over this, there'll be an order to see the trust doc anyway.

You may want to weigh the cost of going to court and locking up the property for an extended period of time (with a possible judgement on the property) against working with the tenant and closing agent and cashing out of the house.

Again, I'm not jim, and I'm not an attorney, but there's my $0.02.

[Jason2020]

I am not above gravelling now if that is what it takes but I was hoping Jim has run into this since he was so adament about not sharing his trust docs with a closing agent.

I have a small issue relating to the trust doc I'd rather not share in public but if there is any way to avoid having to share them I'd prefer it.

[Debbie]

I am not above gravelling now if that is what it takes but I was hoping Jim has run into this since he was so adament about not sharing his trust docs with a closing agent.

I have a small issue relating to the trust doc I'd rather not share in public but if there is any way to avoid having to share them I'd prefer it.

Jim usually comes here almost daily. But he may be busy. Give him a private mail to give him a nudge.....

[KCHomebuyers]

I'd say you may be beyond not airing any issues, and most can be solved either with paperwork, a check, or both. PM me about the issue, and I might have run into it before.

We've only done a dozen flips and we've currently got 6 sub-2's, so our experience level is a little above novice - but I'd be glad to offer up any experience I have.

[Jim FL]

Jim FL I am really hoping you can help me here.

I was cruising the internet a while back because I was faced with the exact scenerio here. I have a house I bought sub2 and it is held in a trust. I am selling now and the closing agent asked for the trust documents. After reading this thread I was confident in my, "No, you can't have them" answer but now I think I have a big problem.

Today I was given notice that my tenant buyer will not be closing and since the closing could not take place because of my lack of cooperation their new lawyer is now demanding I return the option fee from 18 months ago and the amount over market rent we were crediting to the sale for the last 18 months. I offered to get my attorney to do the closing but was told the lender and buyer determines who closes the loan, not the seller.

How badly am I screwed?

Don't get the wrong idea. I am not trying to blame anyone this is completely my fault but if you have run into a similar thing and have any wisdom to offer I'd sure like to hear it. FWIW, my lawyer told me about 30 minutes ago I am screwed and should be glad all they want is their option fee and rent credit back. He is recommending I get them a check asap.


Jason,
Sorry for the delay, but, yes, lately, my REI business has been keeping away from the keys as much as I used to be.

Anyway.........

I agree with Pat, sounds to me like there was some mis-communication.

When the closing agent, (I assume this was a title company rep?), asked for trust docs, ask them why?
Frankly, it's because they want to know you, or whoever the trustee is, has the authority to sell the property.
So, produce something to show this.
Sometimes the trust and assignment of beneficial interest are asked for.......
I always say no, and then ask what else we can do, because the owners of the trust have asked that it remain private, etc.
Usually, we close, and the trustee signs an affidavit stating the trust is in full effect, and that the trustee has the authority to close etc.

Perhaps this can be done.

I'd call some folks, get the deal closed.

And yes, there does seem to be some missing info, which you illuded too in your last post.

Feel free to email me, or pm me here at MB's, to discuss specifics.

The problem can most likely be over come, if you take a step back.
By the way, giving back 'rent credits', is just silly, so it sounds like both your lawyer and theirs, aren't at the top of their game.
Then again, we don't know everything, so, drop me a line.

Take care,
Jim FL

[Debbie]

Jim FL I am really hoping you can help me here.

I was cruising the internet a while back because I was faced with the exact scenerio here. I have a house I bought sub2 and it is held in a trust. I am selling now and the closing agent asked for the trust documents. After reading this thread I was confident in my, "No, you can't have them" answer but now I think I have a big problem.

Today I was given notice that my tenant buyer will not be closing and since the closing could not take place because of my lack of cooperation their new lawyer is now demanding I return the option fee from 18 months ago and the amount over market rent we were crediting to the sale for the last 18 months. I offered to get my attorney to do the closing but was told the lender and buyer determines who closes the loan, not the seller.

How badly am I screwed?

Don't get the wrong idea. I am not trying to blame anyone this is completely my fault but if you have run into a similar thing and have any wisdom to offer I'd sure like to hear it. FWIW, my lawyer told me about 30 minutes ago I am screwed and should be glad all they want is their option fee and rent credit back. He is recommending I get them a check asap.

Jason,

A very good acquaintance of mine who is very familiar with trust, offers this advice for me to pass along to you:

If I woke up and found myself in his shoes and there was some real reason I couldn't share the trust docs with the buyer and closing agent I would...

Contact the buyer to see if they still want to buy the house. If they do, I would contact the closing agent and offer to execute a WARRANTY DEED (or Grant Deed depending on the state) from the trust into MY NAME. Then the same type of deed would be executed from me to the buyer. This can all be done at the closing table. I would also offer to pay the full cost of a buyers policy of title insurance. I might even offer to throw in a few dollars to buy down the interest rate or cover some other costs to compensate them for their inconvenience.

In all likelihood they have been spooked about the real marketability of the title. If that is the case and they still want the house, the steps above should placate everyone involved, even the lawyers.

[KCHomebuyers]

Sounds like some decent advice. What was it I said in my response? "...and most can be solved either with paperwork, a check, or both." :D

Let us know how it works out!

[Jason2020]

When the closing agent, (I assume this was a title company rep?), asked for trust docs, ask them why?
Frankly, it's because they want to know you, or whoever the trustee is, has the authority to sell the property.
So, produce something to show this.
Sometimes the trust and assignment of beneficial interest are asked for.......
I always say no, and then ask what else we can do, because the owners of the trust have asked that it remain private, etc.
Usually, we close, and the trustee signs an affidavit stating the trust is in full effect, and that the trustee has the authority to close etc.


Alright, usually doesn't mean always. What did you do when they would not accept the affidavit?

Please do not misread my questions here. I am not blaming you, it is completely my fault for not checking deaper to see exactly what my liabilitees would be if I said no and they pushed.

But, I was hoping you had something to back up the "I'd still be laughing" comment about someone wanting to see your trust docs. I was hoping you knew something that would allow me to force using another title company which is how you responded to DanS with a similar problem.

Again, I don't consider this to be your fault or problem and I have learned to do more checking and not stopping just because I find the answer I want to hear.

[Jason2020]

Pat and Debbie, thx for the suggestions I printed this thread to take with me to meet with my lawyer this afternoon. I hope we can peace this thing back together. My tenant buyers still want the house so there is some hope.

[Jim FL]

Alright, usually doesn't mean always. What did you do when they would not accept the affidavit?

Please do not misread my questions here. I am not blaming you, it is completely my fault for not checking deaper to see exactly what my liabilitees would be if I said no and they pushed.

But, I was hoping you had something to back up the "I'd still be laughing" comment about someone wanting to see your trust docs. I was hoping you knew something that would allow me to force using another title company which is how you responded to DanS with a similar problem.

Again, I don't consider this to be your fault or problem and I have learned to do more checking and not stopping just because I find the answer I want to hear.


Jason,
One of the things I specialize in is getting the deal close/getting paid.
This, to me, aside from marketing, is the biggest responsibility we have in our business.

Now, when I close, I close at my lawyers office, using law title.
It's in my contracts when we sell, that closing takes place at the title company of my choice.

So, when the buyers placed a contract, and it was time to order title, you simply take the contract to your closing agency (attny or title company), and get it done.

From the very minute a contract is signed with a buyer, I take the deal by the reigns, and remain in contact with ALL parties.......the buyers, the buyers lender, the title agent/attorney, any inspectors/inspections that need to be done, etc.
I pretty much run everything down as its needed, and wrestle the deal to close........which is payday for me.

So, get ahold of a decent closing company, get the loan package etc to them, and get it closed.

or
Talk to all parties, and work it out.

Like I said before, drop me a pm, there seems to be more to the story here.

Take care,
Jim FL

[Jim FL]

Tim,

You asked:
"Do you require your tenant buyers to use a specific lender?"

Reply:
Most of the time.
I TRY to steer folks toward my mortgage broker, for two reasons.
1. He's good and gets things done.
2. He understands where I am at, what's needed etc. (helps avoid things like 'title seasoning' etc.)

The lender has NEVER required a copy of the trust etc, and all docs provided at the close, are done by my attny.
The title committment has always been enough.

Never heard of a lender for the buyers wanting to see a trust doc, that's an issue for the title company........which in Jasons situation, it appeared to be them (title company), kicking up heals.

It sounds to me like this title rep has not closed a deal where title was held in a trust before.
Again though, not gotten a pm or email from him, and he did indicate there was missing info.
So, I'm not completey sure what the real issue is........and guessing is not something I'm good at.

Take care Tim,
Jim FL

[JohnCashLocke]

Jim,

What's a Trust? Have never used one.

John $Cash$ Locke

[KCHomebuyers]

Check out William Bronchick at www.legalwiz.com (http://www.legalwiz.com) . I'm pretty sure that most trust documents the gurus use are a very close derivitive of his documents.

This is a pretty good description of what a trust is as well, although bear in mind it IS wikipedia, not Britanica!
http://en.wikipedia.org/wiki/Land_trust

[JohnCashLocke]

Pat,

Glad to meet you.

Jim and I go way back and I was just in my dry sense of humor way saying hello.

When I met with Bill B. for breakfast at his invitation, when I showed him my Credential Book with the over 500 Subject To deals that are recorded on various County Recorders web sites, the subject of using a trust never came up.

However, Bill B. and Jim FL are the people to contact when it comes to Land Trusts. Now in North Carolina the Attorney General considers using a Land Trust by creative investors Fraud, as it hides ownership. The reason I know this is because the Chief Legal Counsel of NC wanted to talk to me about Subject To investing, the main reason I suppose is that I do not use trusts and they wanted an objective opinion from a creative investor. I even wrote an article about our conversation.

http://www.reiclub.com/articles/nc-commission-answers

The reason I mention this is because I am currently investing in NC, as I have found the appreciation here has been steady, so depreciation is not a factor like it is in other areas. Which makes for great Subject To deals.

John $Cash$ Locke

[SPIVALAW]

Let me save you some time.

Land Trust, Grantor Trust, Living trust, Personal Property trust...

A trust is a trust is a trust.

A trust is a document or piece of paper where someone else (trustee) holds title for your benefit (benficiary).

No asset protection (except it hides owner), and no special deductions and no tax savings.

Nuff said.

[JohnCashLocke]

Howard,

Thank you, I believe I have it down now.

By the way, I see you have been a great help to creative investors on this site by reading through some of the posts. You are to be complimented for your devotion to helping others.

John $Cash$ Locke

[Debbie]

Welcome back John.

It's been awhile since we've seen you here. All is well with you?

[JohnCashLocke]

Hi, Debbie,

Everything has been fine.

It just dawned on me (again) about your great discussion board when I was reading one of Dan's posts on one of the three creative real estate discussion boards I Moderate on. Which takes up some of my time along with helping my students become successful.

I will try to take a little more time to answer posts, but knowing you had JimFL here, I felt it was in very capable hands when it came to Subject To investing answers.

I found another tool for the tool box of investors and have been following up on it, as it has proven to be very valuable in todays market. This is one that has been around since about 500 BC, so I would have to say it works.

Talk soon,

John $Cash$ Locke

[Tantric Realty]

I found another tool for the tool box of investors and have been following up on it, as it has proven to be very valuable in todays market. This is one that has been around since about 500 BC, so I would have to say it works.

pillage and plunder, taketh what thy wanteth :smiley21:

j/lk


is this a secret that has to be purchased via REI course? just curious, I am always looking to expand my knowledge.

[JohnCashLocke]

Glad to meet you.

pillage and plunder, taketh what thy wanteth :smiley21:

I was not referring to how it is done today per your quote.

It is not taught in any REI course to my knowledge nor is it a secret, however since you asked and you are by your NIC involved in real estate either as an investor or agent let me ask you a question.

If you could look into the eyes of a seller and say "pick the Exact Day you want your property sold and I will guarantee you will receive Fair Market Value for your property on that day, all you have to do is pay for the advertising, which is about 1% of the properties value."

I will collect my 10% fee up and above the selling price from the Buyer not you. Mr. Seller just sign here.

There are many creative investing ways to use this method, not just the one I described above.

Those Babylonians in 500 BC had it down how to sell things and their method has continued on to present day, have you figured out what my method is yet?

John $Cash$ Locke

[JohnCashLocke]

Tim,

Glad to meet you.

So in todays market with properties lingering on the MLS month after month without results, then taking into account Holding Costs of a property over a 6 to 12 month period, I believe you will find that using the Auction Method is a viable way for a seller to cut to the chase. Then again they could wait for further depreciation to take place.

Auction Industry Report Projects Continued Positive Growth

"July 23, 2007, Overland Park, KS - During the "State of the Industry" forum at the 58th International Auctioneers Association Conference and Show in San Diego, the National Auctioneers Association (NAA) unveiled industry projections for 2007. The industry survey was conducted by MORPACE International and projected the industry to grow $7.6 billion in 2007.

If the current trend continues, analysts project industry revenues to reach $264.8 billion by the end of the year. This is the fourth consecutive year that the live auction industry has witnessed growth. In 2006, the total value of goods and services sold at auction totaled $257.2 billion, an increase of 7.1% from 2005.

The fastest growing auction specialty is real estate. Residential real estate auctions grew 39% between 2003 and 2006. During this same time period, land and agricultural real estate grew 33% and commercial and industrial real estate grew 27%.

The survey also highlighted growth in the real estate sector with thirty-six percent of respondents reporting increases in residential real estate sale receipts and a twenty-three percent increase in commercial real estate."

Here is just one Auction Firm that has a few properties going to auction, they even have some in your neck of the woods.

http://www.hudsonandmarshall.com/calendar.asp

You can use this method for Short Sales, as the lenders realize the expediency of using the Auction Method. Here is a property I took Sub 2, got creative and rather than re-habbing it, only gave the potential buyer a this is what it will look like and it sold with yard signs in 5 days showing the web site and my phone number. It was going to Auction it, but felt that 5 days was long enough to have it on the market. www.restorehistory.com

There are many methods of creative real estate investing, so if an investor puts the blinders on, then they could be missing how to sell properties from 85%to 105% of FMV.

John $Cash$ Locke

[Jim FL]

Jim,

What's a Trust? Have never used one.

John $Cash$ Locke


Mr. $Cash$,
Always a pleasure to 'see' you my friend.
Glad you stopped by here.

I looked at the restorehistory house, looked like a neat project, something my wife would enjoy.

How have you been lately?
Still in FL, but doing deals in N.C.?
or
Did you move?

Anyway, drop me a line in email at your conveience, I have a question for you.

Take care,
Jim FL

[JohnCashLocke]

Tim,

The fact that the Auctioneer receives a 10% Buyer Premium is not hidden from the seller nor from the buyer. The seller understand perfectly that this is part of the cost of selling their property and the buyer understands this also.

People have a tendency to get caught up in the heat of the moment at an Auction, especially when a Professional Auctioneer and Professional Ringmen are involved and I have seen many times where the buyers premium went by the wayside in the mind of the bidder.

Just as a real estate agent charges a commission for selling a property, it is part of doing business.

So yes, you can guarantee someone they receive FMV for their property less costs associated with selling the property, someone might say, if they pay closing costs and other fees associated with typical closings they did not get FMV.

"True market value can be defined as the highest price in terms of money that a property will bring in a competitive and open market under all conditions requisite to a fair sale." This is what the Auctioneer is responsible for doing for their client.

There are many ways to work with Auctioneers for the benefit of the creative investor.

John $Cash$ Locke

[JohnCashLocke]

Jim,

Moved up to NC awhile back, the market is fairly stable and very conducive to Subject To investing.

I will fire off an email in a few.

I see this board is no different than others when you are the new guy. :smile:

John $Cash$ Locke

[JohnCashLocke]

Tim,


In your example from earlier today it is not like a commission on a real estate sale because you are guaranteeing the seller Fair Market Value and telling them you collect 10% above that Fair Market Value price as your fee.

Reread what I said:

I will collect my 10% fee up and above the selling price from the Buyer not you. Mr. Seller just sign here.

You made the statement I said up an above the FMV, so show me where I said this without drawing your own inference to what I actually and factually said?

Tim, I think you are like most posters who have something to sell and when someone new shows up they like to flex their territorial rights. It's OK I have seen it hundreds of times.

John $Cash$ Locke

[Debbie]

Tim, I think you are like most posters who have something to sell and when someone new shows up they like to flex their territorial rights. It's OK I have seen it hundreds of times.

John $Cash$ Locke

John,

May I suggest that you read this week's MagicBullets.com Newsletter.

There is an article about Tim.

Let me assure you---Tim is NOT like most posters NOR is he someone who wants to sell.

BTW---Tim is one of our moderators

[JohnCashLocke]

Debbie,

Whenever I am in doubt about what a poster says, I will use proper board etiquette and ask the poster to explain further rather than attack them with innuendo.

When Dan posted his email address on another board where email addresses are not allowed, because it was Dan I let go. I did not slam him for breaking the rules.

Courtesy begets courtesy and I have no problem if any Moderator feels that my posts should be deleted, as this is their board and their decision.

I thought as a courtesy I would help out in answering posters and contributing to this board, I see that I am not welcome, so this will be my last post.

The very best investing to everyone.

John $Cash$ Locke

[Debbie]

:confused:

Did I miss something John?

I'm sorry if I gave you the wrong impression. I don't believe that I was insinuating that you are not welcome. In fact, I welcome you and I always have.

I simply requested that you read about an article regarding Tim. Why? For the sole purpose for you to become a little more familiar with Tim and realize that he is not like most posters.

[Debbie]

Let me assure you---Tim is NOT like most posters NOR is he someone who wants to sell.

Oh darn it Tim! I guess I'll have to eat my word "sell" because from the looks of thing, we have a different definition! :SM090: :SM029:

[Jason2020]

I sat down with my attorney and the closing agent today.

Jim FL, it isn't the closing agent is inexperienced or a complete dolt. This came from the lender the closing agent showed us the list of things they have to do and certify to close for that lender. He also shared with me that they received similar notice of this type of thing from another lender this week.

Perhaps things are still different for you where you are but this is not a local yokal lender they operate in all states. I beleive this is going to be an issue that spreads far and wide.

Here is what we worked out. As the trustee I am executing a warranty deed from the trust to a me as a natural person. The deed was drafted today, I signed it and it will be recorded next week. Then the closing agent is comfortable binding the title at standard rates as long as I as a natural person execute a warranty deed to the buyers.

It's costing me a few dollars but we are going to get there in the end.

Thanks to everyone who offered me help and advice. As I said earlier, I have learned a very valuable lesson and will not forget it. It is always up to the reader to make sure what they read is valid for their circumstances.

[Debbie]

I sat down with my attorney and the closing agent today.

Jim FL, it isn't the closing agent is inexperienced or a complete dolt. This came from the lender the closing agent showed us the list of things they have to do and certify to close for that lender. He also shared with me that they received similar notice of this type of thing from another lender this week.

Perhaps things are still different for you where you are but this is not a local yokal lender they operate in all states. I beleive this is going to be an issue that spreads far and wide.

Here is what we worked out. As the trustee I am executing a warranty deed from the trust to a me as a natural person. The deed was drafted today, I signed it and it will be recorded next week. Then the closing agent is comfortable binding the title at standard rates as long as I as a natural person execute a warranty deed to the buyers.

It's costing me a few dollars but we are going to get there in the end.

Thanks to everyone who offered me help and advice. As I said earlier, I have learned a very valuable lesson and will not forget it. It is always up to the reader to make sure what they read is valid for their circumstances.

It appears that my good acquaintance gave you good advice. I'll be sure to let him know that it turned out well.

Thank you for the update!

[Jim FL]

I sat down with my attorney and the closing agent today.

Jim FL, it isn't the closing agent is inexperienced or a complete dolt. This came from the lender the closing agent showed us the list of things they have to do and certify to close for that lender. He also shared with me that they received similar notice of this type of thing from another lender this week.

Perhaps things are still different for you where you are but this is not a local yokal lender they operate in all states. I beleive this is going to be an issue that spreads far and wide.

Here is what we worked out. As the trustee I am executing a warranty deed from the trust to a me as a natural person. The deed was drafted today, I signed it and it will be recorded next week. Then the closing agent is comfortable binding the title at standard rates as long as I as a natural person execute a warranty deed to the buyers.

It's costing me a few dollars but we are going to get there in the end.

Thanks to everyone who offered me help and advice. As I said earlier, I have learned a very valuable lesson and will not forget it. It is always up to the reader to make sure what they read is valid for their circumstances.


Jason,
FANTASTIC to hear!
I'm glad you got it worked out.
Sounds like a good solution to me.
For me, its just a matter of using my closing person.
I too have seen a list where the lender wants to verify that the trust is in effect, and that the trustee has the authority to sell the property etc.
This is where the affidavit my attny uses comes into play.
I'll admit, my attny, he seems to practice law because he loves it, but makes his real living investing himself.
He sees things a little different than most, and gets things done others don't seem to be able to.

Bottom line, whatever you have to do, as long as it's ethical, legal and moral, to get paid, seems like a good plan.

Glad yours worked out, congratulations,
Jim FL

P.S. Debbie, yes, your friend gave good advice, invite them here to MB's, the more the merrier. :-)

[Debbie]

P.S. Debbie, yes, your friend gave good advice, invite them here to MB's, the more the merrier. :-)

He's posted once before. I tried persuade him to post more often without success. :SM121:

[Jason2020]

Jim FL,

Please don't think me unkind but your later advice just didn't match with the "I'd just shop the closing agent and get it done" from before.

When push came to shove, if I'd done it the way you were recommending I'd be in a big mess.

Maybe what you were saying works for you. Maybe your area is different but please for those of us who are still a little green about this stuff don't trivialise and pretend you can force a deal to close. Because as I have learned, if a lender is involved they are the ones in control now more than ever before. Or at least as long as Ive been doing this. (two years)

[Jason2020]

Debbie, is there anyway I can express my gratitude to your friend? I'd at least like to say thank you to them.

[Debbie]

Debbie, is there anyway I can express my gratitude to your friend? I'd at least like to say thank you to them.

I did mentioned it to this good acquaintance of mine. He's happy for you.

I'll pass your comments to him.

[Debbie]

Jason,

I'm glad things worked out for you but let's not be too hard on Jim. He was trying to help just like everyone else.

Jason,

I've known Jim for quite awhile. I can vouch that Jim's a really good guy and tries his best.

[Tantric Realty]

I figured it out.

It is an Auction, I didn't even read Tims post, I get all the credit. :SM013:


I have read up on the auctions, from what I read, you should expect to get about 90% FMV, but then like Tim stated....err wait, I was gonna post that first... take out your fee and advertisement... takes it down to about 85% or other.

Is this not the case? perhaps what i read in these threads were not using the same method you have in mind? they say advertise the auction starting at half the market value and you should get bid up to about 90...

(maybe you have a friend in the crowd to bid it up higher?)

[Tantric Realty]

All I wanted to know is what the secret was.

As someone who is on the learning curve, I did have the same thoughts Tim had, as to how the seller would receive the FMV (the less sale cost wasn't clearly noted until later)

Then that brings the question of where does the money come from "up and above" if it is actually included.

I'm sure Tim is not meaning to be as what you think, he has in fact brought up good points that need addressed in which other people will read in the future.

Scott