First Sub To Need Some Help ASAP
I have my first sub-to deal, but I need help with the documents. I would like to create a trust and have the seller deed the property to the trust. My questions are as follows:
1. What amount is the contract offer for?the total amount of the property with back payments from the bank, or just the amount of the back payments to bring the loan current?
2. Other than the purchase and sale agreement, what other docs should I have the seller sign when I meet with them?
3. If I include the "subject to existing financing" in my offer, can my title company legally generate the necessary documents to close the deal, put the prop. into trust, etc.
Thanks for all the help.
Big Wave,
Charlie Frances is the Queen of Sub 2. I can not remember everything but I recently took a class with her and she said that one of the documents that you want to have signed is a Limited Power of Attorney over the property. That way if anything happens to the seller before you complete the deal, you can still control the property.
Good luck.
Great, thanks. I've got a copy of one of those. What else?
You should pick up John Locke’s course on Subject To. The answers to all your questions will be answered in the book and with the purchase you can call him with specific questions. Also find yourself a reliable real estate attorney. By the way, congratulations and keep up the good work!
Eric & Rosa
[addsig]
From my understanding, you would not need a purchase contract or title company. You are purchasing subject to any existing mortgages. The deed is signed over to you/trust. In return you are responsible for any liens/mortgages (well sort of ,actually the mortgage is still under the sellers name.) Anyhow, my point is: if you get the banks and title company involved you are asking for trouble with the 'due on sale clause.' Once you get your documents in order, a subject-to can be closed over the kitchen table.
Big Wave,
Here are a few steps:
BUYING HOMES “SUBJECT TOO”
1. Sign A Contract With The Seller Subject Too The Existing Mortgages.
2. Have The Seller Sign The Seller Property Disclosure Statement.
3. Have The Seller Sign The Seller’s Affidavit. (Same Name Affidavit)
4. Have Seller Sign A Power Of Attorney “Trustee Authorization” Regarding Insurance And Taxes.
5. Seller Then Signs Seller Mortgage Disclosure Statement (Due On Sale Disclosure Notice).
6. Seller Signs Letter Appointing Management.
7. Seller Then Signs Letter To Lender “Notification Of Establishment Of Trust” Hold This Letter In The File.
8. Seller Then Signs Letter To Insurance Company “Notification Of Establishment Of Trust” And To Change The Insurance Policy To A Landlord Policy And Naming The Trust And Trustee As Insured. (Keep This On File Just In Case You Don’t Have Your Own Insurance In Place For These Deals)
9. Have Seller Sign The “Change Of Address” Form From The Seller’s Mortgage Company Statement.
10. Now The Seller Creates The Land Trust, Which Will Own The Property.
11. Seller Signs Appointment Of Trustee. (You Or Your Appointee)
12. Seller Signs Appointment Of Successor Trustee. (You Or Your Appointee)
13. Seller Signs “Declaration Of Trust And Land Trust Agreement Naming Seller As Beneficiary.
14. Have The Seller Sign The “Standard Warranty Deed” Before A Notary.
15. Seller Signs “Assignment Of Beneficial Interest And Quit Claim Of Land Trust” Assigning Their Beneficial Interest In The Trust To A Personal Property Trust You Create For This Purpose Or Any Other Entity That You Choose To.
16. Seller Sign The “Estoppel Letter” This Is To Be Sent To The Mortgage Companies To Verify All Balances.
17. Before You Invest Any Money Paying A Seller Or Bringing A Loan Current, Always Get A Title Search From An Insured Title Researcher. Verify That The Sellers Are The Proper Parties And That No Undisclosed Liens Exist.
18. Record The “Standard Warranty Deed” Along With The “Affidavit Of Land Trust” As Soon As Possible.
Now I do just a little different on some occasions
Great post JR FL. I have never seen it broken down like that. I think this will help a lot of us. Thanks.
Prosperous investing,
td
Hey BigWave,
We are in the same situation. I appreciate your questions. Well, we may be a bit further behind. Is the first step to get an attorney who can draw up the Offer to Purchase and The Contract?
Thanks in advance.
That was a good post, it is just what I was looking for also, my question is where do I get all the paper work you were talking about, No time to buy a course , I have a chance to sign a sub-2 deal tomarrow, any help could go to my e-mail **Please See My Profile** Thanks
Thanks for that post JR_FL. It looks like you use Louis Brown's stuff. I also have his but I had a couple of questions about your checklist that I thought were inconsistent.
On item 13, you say that the seller signs the Declaration of Trust and Land Trust Agreement". However, on my Lou Brown documents, there is no place for the seller/grantor to sign. I would think, as you say, that the seller should sign. But the only spots for signatures are for witnesses, the beneficiary(ies), notary public and the trustee. Do you have the seller sign in one of these spots??
Also, on number 15 you have the seller sign the "Assignment of Beneficial Interest and Quit Claim of Land Trust". All Lou Brown has is the Assignment of Beneficial Interest in Land Trust" so I was wondering where you came up with the rest?
But, I think I know what you're trying to get at with the Quit Claim. Is it that you need the seller as grantor of the trust to relinquish any control over this revocable trust? I've always wondered, since the trust is revocable, whether the seller at some point down the road could somehow revoke the trust and cancel the whole deal leaving you, as the buyer, out in the cold with nothing.
Thanks for any insight.
Erick...thats why you have the Quitclaim deed and all of the other docs signed by the seller pertaining to the deal. That gives you a leg to stand on when your seller tries to come back. And if you did everything in good taste and the seller was truly motivated, they will not come back. They do not want anything to do with the property (in most cases)
Erick,
You are correct that its Lou Brown's materials. I would be lost with out it.
Now to answer your question.
#13...The seller does sign as benificiary of the trust....The seller is the Benificiary.
I get the Notary to acknowledge the Trustee and the Beneificiary. Plus the witness for each. Sure its an over kill but its all belt and suspenders.
#15 is a New Assignment of Bene form that he developed at the last Trust class about a year and half ago.
Ahh haa. So, he's redeveloped that Assignment form, eh?
I bought the Whole Enchilada course about 2 yrs ago so I must have missed that change. I just saw him present at the Ohio REIA conference a few weeks ago. He did have a few extra gems that I spotted in his material and so I'm considering paying for upgrade deal he has for, I believe, $300.
A couple of the things he added were the option price and land contract price calculator spreadsheets. He also added a short sale kit when included when purchasing the Whole Enchilada. Do you have either of the last couple of items? What do you think about the short sale kit, if you have it.