3 Questions For Pro's Only
Got a subto deal, it's a done deal, were closing tuesday.
Wondering about a couple things someone local told me to be wary of.
1. One was, I should get a 2nd insurance policy rather than try to change the exisiting one into a landlord policy. He said this act alone triggers the dos clause more than anything else due the insurance company changing the policy from homeowner to landlord and then notifity the bank. RED FLAG.
Ok, so then I started thinking about this, in this day and age of gay partnerships.. I asked my attorney today If I could just add myself to the owners exisiting policy as an additional insured since I was now as far as the insurance company knows, moving in to the property, paying half the payments and we were now "life partners" and we would draft a letter telling the insurance company that.
He said this was a brilliant idea. I said, well we'll see. What do you say?
btw- for the record, I'm happily married to a member of the female tribe : )
2. Title insurance/recording docs/ and doc stamps.
Do you guys always get title insurance or do you just do a title "check down" where title is checked until the last title policy was issued? Do you buy doc stamps? What do you record when buying property into a land trust?
just the deed or the deed and the land trusts? Anything else?
3rd Taxes. (everyones favorite)
What's stopping me from putting a provision in the subto contract that states the land trust will derive all tax benifets of said property including exemptions, deductions, depreciation, etc. on the property in the trust?
I mentioned this to an experienced closer and she accused me of having the biggest gonads in the world and I was begging for the DOS clause to kick in by doing that. I asked her if she'd ever heard of anyone doing it or trying it? She said No. I calmly explained to her, that the bank has nothing to do with the IRS, other other than the bank sends the tax credit form with the owners Social Security number to an address I provide and all I would do is take the deduction that I'm legally entitled to. If questioned by the IRS I would show my contract showing I have a right to the deduction.
Aftter all, if the original owner is not claiming it, nor paying in to it, why shouldn't I derive the benifit that is clearly given to me in contract?
Worst case scenario, they deny the deduction true? The chances of them running to the mortgage company and ratting me out is about as slim as GW Bush stopping by personally to pick up my federal tax check. I've read some very good posts on this but not any addressing this specific issue where the right to the tax credit was a condition of the contract.
Comments? LET EM RIP !!
BTW- House cost me $10, has 25k of equity in it. All it needs is carpet cleaned and 3 gallons of water and some spic and span. 4bdr/2 bath 1600 sq ft! Gonna keep it long term and let someone else pay for it via rent. woohoo!!
G[ Edited by GWmson on Date 02/13/2004 ]
1. One was, I should get a 2nd insurance policy rather than try to change the exisiting one into a landlord policy.
We always convert to a landlord policy with the Land Trust as Additionally insured, unless it is a particular FHA loan I wouldn't worry with the"trigger". Certian (Ibelieve they are) FHA loans have to be owner occupied for a period of time.
2. Title insurance/recording docs/ and doc stamps.
We just do the title work our selves. If you can do a proper title search you did the samething as a title comp. We don't have stamps or anthing in my state so I can't address that but we just register the deed and pay $10.
What's stopping me from putting a provision in the subto contract that states the land trust will derive all tax benifets of said property including exemptions, deductions, depreciation, etc. on the property in the trust?
If you put the deed into a Land Trust and you are the benificial interest you own the property. You have the right to take all deductions and get all the benifits of ownership.
Hope this helps
Sire
Listen to Sire. I would recommend getting title insurance.
Best Riches,
Jeff Adam
[addsig]
One of the benefits of a sub2 deal is that you get the tax writeoff. I guess your closer thinks you have a big sack now.
Double bonus I guess?
Ditto all the things that sire mentioned.
Ryan J. Schnabel
It sounds like you are already putting it into trust. If you so this as you close you have the seller name the trust as the additional insured and then sign over 1. beneficial interest to you (then you get all the deductions) and 2. sign over all rights to insurance payments in the future.
I haven't even hear d of a DOS being exercised in todays market. That said a land trust ought to get you around all that.
1. seller sends letters to insurance and mortgage company telling them he is putting it in trust for his own benefit.
2. letter to Insurance company naming trust as additional insured (may be combined with letter one)
3. creates trust with yourself as trustee and fund the trust (pass title)
4. have owner pass entire beneficial interest to you. THis leaves "you" in complete control and ownership of the property.
I think all the issues have been addressed here.
Good Luck
Randall
[addsig]
Randall,
I get it all except how do you sign over all rights to insurance payments in the future. What document is it that you sign that you can put this clause in?
Thanks
Sam
Thanks guys great answers!!
One more.
I'm going to setup a p.o box to conduct the business as the mgmt company/loan servicing company, etc.
And I dont want to get a p.o.box for each house I get. So can I just name my po box. something like this?
ABC Family Trust and Management Group?
Even if I'm not really a registered company on record yet? I do plan on getting a LLC some time this year. But right now, I'm getting by with what I got. If possible.
I know the safest way is to put the sellers name as the John Smith Family Trust on the address, but do you think having a more generic name that can serve serveral purposes will be fine?
thanks guys.
whatta crowd.. whatta crowd..[ Edited by GWmson on Date 02/14/2004 ]
We use a mail box service that way I get my bills and my business mail sent to the same box. The bigest bonus is I told the gals that work there what I do so ANY mail that comes there my attn, or names of previous owners which the mortgage comp. doen't correct fast enough comes to me no problem. That could be an issue with the Post office.
Just a thought
Sire