Selling Sub To Home
I have a buyer for one of my Sub To homes, What is the process I need to take if the home is in a land trust, this is the first home I have had to cash out.
Rob Carroll
AHS
I have a buyer for one of my Sub To homes, What is the process I need to take if the home is in a land trust, this is the first home I have had to cash out.
Rob Carroll
AHS
It's really up to you and your buyer. Do they want or need you to provide financing?, Are they bring new money to the table to cash you out?
You can sell this property creatively, or conventionally. How you acquired it has very little to do with how you sell it. Unless you obligated yourself to something when you purchased it. If so abide by them.
If there will be new financing, I'd recommend killing the Trust that you established. This is easy. When the terms of the sale have been met, you can simply instruct the Trustee to issue a trustee's deed to the new owner. After this has been done. if there is no other property in the trust, the trust is no longer funded, and therefore a dead issue.
If the existing financing will remain in place, yo could leave the trust in place, Your choice. If the trust will remain in effect, you can assign the beneficial interest in the trust to the new owners.
Jeff[ Edited by jeff12002 on Date 06/07/2004 ]
I would say that Jeff's response pretty much answers the question.
One point not raise in the question that you might consider...
Will you see much of a profit coming out of the deal. If you expect to roll the money forward into another deal consider a sale to the buyer structured as a 1031 exchange. This way you can defer the taxes due by moving the tax basis to a similar investment.
The 1031 rules are specific. I just want to raise the possibility before you go and agree a sale and no longer have the option. As there is minimal impact to the buyer (mostly a paperwork change) they should not care. You do have some timing issues but find out about 1031's to identify.
If needed start a new thread. Search the archives first as would guess this will have come up before (and search the articles).
John
[addsig]
Why kill the trust if new financing is used? As I hold beneficial interest the $$ flows through to me anyway and the trust can be ammended later, killed, or have other properties added to it.
[addsig]
Stockpro99,
The only reason I recommendedkilling he trust is if you sell to someone that's not an investor, or doesn't understand trusts, then you will either end up educating them about the trusts, or leaving them to figgure things out for themselves.
A large number of professionals in this business don't understand them, and they probably will get some crappy response from someone they trust that will end up causing doubt that things are on the up-and-up with your deal. This could cause issues that you will have to address to ease your buyers mind.
It's not a legal issue by any means, I just don't want things to mess up my deals, so I try to remove the obvious obsticles along the way.
Jeff
Depends on how you are selling your house. If your buyer has conventional financing, the trust will make things more complicated for the buyer and closing attorney, since the deed is in the trust and you will be transferring it to the buyer. Not impossible, just messy. Trying to explain the Transfer of Beneficial Interest to a buyer might make them reconsider the deal.
If you are using a CFD, then you can leave it in trust until you are finally cashed out when the buyer refinances, since you will be keeping the deed.
If you are wrapping a new mortgage around the original seller's mortgage, that could be ugly if the buyer stops paying. They get the deed, stop paying your mortgage, you have to pay the original seller's mortgage while you are foreclosing.
Better to keep the deed unless they cash you and the original seller's mortgage completely out.
Good luck
Peter