An Equity Holding Trust vs. Lease-Option(Part 3 of 3)

Last week we dove into the bowels of an Equity Holding Trust. This week we will see the uses of it.

The Equity Holding Trust can meet the objectives and functions of any of these arrangements without the many risks associated with them.

AS A LONG TERM LEASE: A Co-Beneficiary Consumer Mortgage Loan Advocate’s EHTrust™ can be set up for up to twenty years, with a Lease of ... the property to a Resident Co-beneficiary for 2 years, eleven months and twenty-nine days.

The lease with the trust will stipulate that at the end of the original lease term, the tenant may "hold-over" in the property until the end of the trust period, unless evicted sooner.

Since an eviction would have to be by mutual direction by ALL beneficiaries: the tenants being one of the beneficiaries, protects him and effectively continues his/her holdover until the termination of the trust.

AS AN AITD (Wrap-Around): A seller places its property into a Consumer Mortgage Loan Advocate’s EHTrust™, assigning a full Beneficiary Interest to the "buyer," with the agreement that the property will be leased to the co-beneficiary on a Triple-Net basis for some specified period of time

The property is then scheduled to be sold at the end of the Agreement. Upon sale there is a distribution of proceeds to (between) parties with respect to each of their proportionate shares of Beneficiary Interest. In order to avoid reassessment for property tax purposes, and to justify mutual Power of Direction, we recommend that the shares of Beneficiary Interest remain at 90%:10% in favor of the "buyer."

Then at the end of the term, the "seller" can forfeit its 10% in consideration of the co-beneficiary`s prompt payment record and strict adherence to the contract.

AS A LAND CONTRACT: (Contract for Deed): Benefits are the same as above.

AS A LEASE OPTION: The property is placed into a No. Amer. CMLA EHTrust™ with the understanding that, at the end of the Agreement, the property will be sold to the Resident Co-Beneficiary for Fair Market Value, minus any and all sums owed to the Resident Co-Beneficiary.

In this scenario verbiage is such that there is actually no "Option" per se; and that there is no "bargain buy-out" provision other than "…at Fair Market Value, less amounts due the respective beneficiaries."

AS A LEASE PURCHASE: Same as above, except that the Agreement provides that the property will definitely be acquired by the Resident Beneficiary at termination irrespective of market conditions, relative values, etc. The Rider in this scenario provides that the co-beneficiary has the obligation either sell or refinance at termination.

AS AN EQUITY SHARE: Same as above, except that parties share 50:50 in the Beneficiary interest within the Consumer Mortgage Loan Advocate’s EHTrust™, with an agreement to share all net profits proportionately at termination.

AS A BRIDGE-LOAN DEVICE (e.g., when a buyer can`t finance, or afford a down payment for several more months or years and the seller may be willing to wait awhile): The Consumer Mortgage Loan Advocate’s EHTrust™ affords such a buyer the opportunity to live in the property, while paying all costs and enjoying all the benefits and incidents of homeownership, including tax write-off and waiting until financing and outright purchase is possible.

In this scenario, the Consumer Mortgage Loan Advocate’s EHTrust™ is set up to coincide with that point in time when the property can be purchased outright by the Resident Beneficiary.

AS A VEHICLE FOR HIGHER RENTS AND FREEDOM FROM ACTIVE LANDLORD RESPONSIBLITIES AND COSTS: A prudent landlord would be well advised to consider making his rental tenant a Co-Beneficiary in a Consumer Mortgage Loan Advocate’s EHTrust™ in which the rental property`s title is vested.

This will give the landlord an ideal opportunity to trade such items as tax write-off, equity, equity build-up, appreciation and the psychological peace of homeownership, for such commodities as free maintenance, repairs, upkeep, management… and much higher rents.

Each one of these "items of trade" has a value, and giving up all or some of each one can more than double rents while simultaneously [greatly] reducing the expense of renting for the tenant.