Protecting Equity In The Property From Ex-owner
I purchased a home sub-to by forming a trust, executing and recording the proper documents. I now find out that the previous owner is trying to out an equity line on the property! I'm hoping that since the Trust is recorded he can't do anything since he won't be able to get clean title; however; is there ANY way he can go around the trust and take out a loan on the property? Can I do anything else to protect the equity???Thank you for your advice. 
He cannot get a loan on what he does not own any longer. Since the trust is recorded the lender will contact the trustee,who tells the lender he no longer has an equitable interest in the property. But be aware this may cause the bank to call the loan (DOS). I would be arranging new financing asap.
Thanks!!! Eeek.
It could be much worse...they could actually have gotten the loan had you not taken the proper steps to protect yourself.
Be thankful that you took the necessary precautions beforehand and let this be a lesson to everyone to not really trust these sellers and only count on what you've got in writing.
Ryan J. Schnabel
When I asked my mortgage broker what steps would be needed to take out a mortgage with a trust here's what I'm told....
"Most lenders want you to Deed out of the Trust before they will do the loan. Some lenders like Chase will all ow you to close in a Trust but they will need a Trust Certification and it has to be revocable. We usually have our Clients Quit Claim out for recording and then they Quit claim back in the next Day. Hope this answers your question."
I hope this helps others protect themselves.
Just so there is no confusion here, the trust is NOT what is protecting you from the seller being able to get an equity line on the home. If you did a true subject to purchase, you got the deed, and recorded it. This is why they can't get an equity line, they do not own the property anymore. You do. When the bank does a title search, it will show up as your property, not the original sellers.
Roger
Thank you for clarifying... I did record the deed. My fear is that the title company won't do a thorough title check-- but that's totally being paranoid.
If they don't do a good title search (I think even a bad one would show that the person trying to get LOC is not the same as the Owner, haha.), that's on them. Their responsibility..Their problem...