Due-On-Sale Clause
So I just saw a guru speak about the benefits of using a PACTrust vs. a Land Trust for holding a Subject 2.
This person claims that the assignment of beneficial interest in a PACTrust is "Personalty" and not "Realty". Because of this, it does not violate the DOS clause, via the Garn-St. Germain act.
Hmmmm, still trying to figure that one out by reading US Collection Code TITLE 12 > CHAPTER 13 > Sec. 1701j-3.
I am stumped. Any thoughts?
No, you don't have your understanding correct.
The beneficary interest and the assignment of that interest are considered personalty..However, the transfer of any beneficiary interest in a trust does violated the due-on-sale clause. Refer to any mortgage document , generally clause 17.
The transfer of property into a trust is one of the 7 exemptions of the Garns-St Germaine Act of 1982. But, the transfer of the bene interest violates the DOS. It's just that knowledge of the assignment of the bene interest is not available to the public. It is held confidential. It would only be divulged by court order.
sammy,
are you saying that it is more difficult for the lender to discover or call due-on-sale with the PacTrust method? Are you using this method and would you recommend it over Simple Trust, or LLC?
Quote:
On 2004-02-22 22:45, sammyvegas wrote:
No, you don't have your understanding correct.
The beneficary interest and the assignment of that interest are considered personalty..However, the transfer of any beneficiary interest in a trust does violated the due-on-sale clause. Refer to any mortgage document , generally clause 17.
The transfer of property into a trust is one of the 7 exemptions of the Garns-St Germaine Act of 1982. But, the transfer of the bene interest violates the DOS. It's just that knowledge of the assignment of the bene interest is not available to the public. It is held confidential. It would only be divulged by court order.