When Do I REO's In A Land Trust In Order To Wholesale?
How do I use land trusts to my advantage in order to wholesale REO's w/o running into the nonassignability clause associated w/ realtor contracts?
Here's what I do know:
1. It is an instrument used as a title holding device.
2.I am able to assign my beneficial interest in a land trust.
Here's what I need cleared up:
Once I make an offer on a property and get it accepted, I then have my buyer come in and fund the deal. At this point, I have my lawyer transfer title in a land trust w/ my LLC as the beneficiary. Then I have my lawyer assign my beneficial interest to my buyer.
Is this scenario correct? Please correct where needed.
[addsig]
When your buyer comes to the closing your assignment fees should go into a separate escrow.
By having a double escrow, one for the realestate transaction and one for the assignment fee there are never any flags that ever go up.
Good luck,
Robert
Can you elaborate a little on that. I understand what you are saying, but how do I convey that to my attorney in a way that isn't confusing?
Also, was my scenario correct in portraying how the land trust is handled.
[addsig]
Why do you feel that you need to use a Land Trust in this transaction? Chances are, the anonymity that you gain by having the property deeded to a land trust will be of little benefit to you during your entire 10 minutes of ownership. Explaining it to the attorney should be pretty simple. Tell them that you want to do a double close on the property. They should understand. If not, consider finding another attorney.
Jeff,
A double closing is what I am trying to avoid...or at least be my last resort...
Let's say that I make an offer through my r.e. agent on a REO with intentions to wholesale it.
With that said...let's say that my offer was accepted and I have my end buyer come to the closing to fund the deal. After my buyer funds the deal, which includes my wholesale fee, is this when I am to have my attorney take or transfer(which is correct) title in a land trust? If so, how can my attorney assign my beneficial interest w/o disclosing the assignment fee to my end buyer and w/o conducting a silmutaneous closing?
Assuming that I am right thus far, let's say that the bank receives the closing documents and recognizes that the name on the original purchase contract that listed my LLC as the buyer, now has the title recorded in the form of a land trust. Do banks usually balk at this change?
[addsig]
Quote:
On 2004-12-01 13:22, jeff12002 wrote:
Why do you feel that you need to use a Land Trust in this transaction? Chances are, the anonymity that you gain by having the property deeded to a land trust will be of little benefit to you during your entire 10 minutes of ownership.
If an investor flips/wholesales "x" amount of homes a year, taking title in his/her own name, even if its only for 10 minutes as you suggested, he or she is allowing anyone to have public access to the fact that you flip properties for a living and can track every single property you have flipped.
I would prefer this information to be kept confidential for a number of reasons...but to each his own.
[addsig]
Quote:
On 2004-12-01 11:13, roberth wrote:
When your buyer comes to the closing your assignment fees should go into a separate escrow.
By having a double escrow, one for the realestate transaction and one for the assignment fee there are never any flags that ever go up.
Ok, So you do this and call it whatever you wish. If you take title either in your LLC, or in your Land Trust, Or personally, essentially it is a double close. At least what I was referring to as a double close. You are setting yourself up to experience a hurdles that you'll have to overcome. First of which is finding an attorney that UNDERSTANDS how a Land Trust works, and then agrees to let you do this.
If you're naming your LLC as the beneficiary of the Land Trust, you are not showing up on title personally any way. So again I ask Why do you feel that you need to use a Land Trust in this situation? Your LLC flips properties, Not you. If your LLC only flips properties, you will not have a large inventory, or a large asset list in the LLC (At least if you're doing it right). What do you expect to gain?
I think I have a basic understanding of what you are trying to do. I suspect though that if you ask yourself some questions about why to do something a certain way, you'll find that you are being redundant. Not that that is a bad thing. You might just be making things more difficult than you need to for the amount of benefit you recieve.
Good luck,
Jeff
Quote:
On 2004-12-01 15:11, jeff12002 wrote:
Quote:
On 2004-12-01 11:13, roberth wrote:
When your buyer comes to the closing your assignment fees should go into a separate escrow.
By having a double escrow, one for the realestate transaction and one for the assignment fee there are never any flags that ever go up.
Ok, So you do this and call it whatever you wish. If you take title either in your LLC, or in your Land Trust, Or personally, essentially it is a double close. At least what I was referring to as a double close. You are setting yourself up to experience a hurdles that you'll have to overcome. First of which is finding an attorney that UNDERSTANDS how a Land Trust works, and then agrees to let you do this.
If you're naming your LLC as the beneficiary of the Land Trust, you are not showing up on title personally any way. So again I ask Why do you feel that you need to use a Land Trust in this situation? Your LLC flips properties, Not you. If your LLC only flips properties, you will not have a large inventory, or a large asset list in the LLC (At least if you're doing it right). What do you expect to gain?
I think I have a basic understanding of what you are trying to do. I suspect though that if you ask yourself some questions about why to do something a certain way, you'll find that you are being redundant. Not that that is a bad thing. You might just be making things more difficult than you need to for the amount of benefit you recieve.
Good luck,
Jeff
Jeff,
So are implying that if I assign beneficial interest in a land trust, that is the same as conducting a double closing. If that is true, then this discussion is null and void.
Let me restate my objective in order to focus on the subject at hand: I am planning to wholesale an REO. I want to place the property in a land trust for 2 reasons.
1. Avoid double closings if at all possible. Why? They involve additional costs and seasoning issues can arise. Yes, I am aware that there are lenders that don't have seasoning requirements. That's why I stated I will settle for a double closing if the need arises.
2. If I take title in a land trust, I will be able to assign my beneficial interest, thereby avoiding a double closing, which is what I am trying to avoid anyway.
Whatever the case may be, my main question is: Is it possible for my attorney to facilitate the closing where the amount that I am assigning my beneficial interest to my end buyer for is undisclosed in a separate statement or something.
[addsig]
[/quote]
Jeff,
So are implying that if I assign beneficial interest in a land trust, that is the same as conducting a double closing. If that is true, then this discussion is null and void.
[/quote]
No, It is my opinion that if you want to take title in a land trust, your LLC, or personally then you will have to bring your own funding/financing to the deal, and actually close on the property yourself. Then close with your buyer. Since you are using an attorney, and an escrow, you will not be able to do what you have described.
Typically when Land Trusts are used creatively, it happens on a "Kitchen" table closing where there are no attorney's, and no escrow. Just you, your seller, and a notary. Then you can sell the property, and transfer beneficial interest as you have described, and transfer title. When you open escrow, there is a set of prescribed rules in force that dictate how the transaction will occur. These rules are for the protection of all parties concerned, and help to ensure that no fraud is occuring.
When your buyer brings financing to the table, the lender that is issuing the loan secured by the real estate that you are selling will have something to say about how your buyer takes posession as well.
I may be just closed minded about this, and I hope that is not the case. I just don't see how you will be able to do what you are trying to do here.
Best of luck,
Jeff
Jeff,
Thanks for your replies.
As far as my buyer's lender determining how title is to be conveyed is a whole new can of worms that comes in to play.
If that was to become an issue, that would justify me conducting a simultaneous closing b/c would be another hurdle to jump.
But as far as doing what I originally mentioned, I will have to look further into that to see if it has or can be done.
[addsig]
I think that you're thinking WAY to hard on this. Real estate is a fairly simple business, you find, you buy, you fix, you sell. No need to complicate things more than necessary.
Also, you live in NC and I'm assuming doing/planning on doing business there. If so, then know this, land trusts are VERY RARE here. The majority of attorneys will not know what you are trying to do OR how to get it done. Good luck finding one that does AND is willing to do them for you. Also, I don't know how you plan on doing your double closings, but in NC, the law is clear on it. You must have your own financing in place on the 1st closing. None of this guru book teaching of "use your buyer's funds to close with the original seller." Again, you will be hard pressed to find an attorney who will do a double closing as per the guru's instructions. The reason is two-fold. First, the attorney is responsible for the funds in a NC closing as all funds go thru their escrow account. So if they fund the first, and there is a hiccup in the 2nd, then the attorney has to eat costs. Don't know many that can let go of $100K +. Second, if it is found out, they will get disbarred. Most attorneys would think this to be bad.
With all that, if the sole purpose of trying to setup a land trust is to keep your personal name out of the public record AND you want to avoid a double closing, then simply take title to the property in the name of an LLC. Once the property is under contract, then sell the LLC to the end investor. It costs roughly $500-600 to setup an LLC thru an attorney or about $250 if you do it yourself.
Roger
Raj
I was aware of the LLC method thru Steve Cook's material,but chose to go the land trust route. My attorney has no problems w/ conducting these types of closings and is also familiar w/ land trusts. I recently spoke w/ steve cook and he recommended buying the property thru trust and then assign beneficial interest. Again, none of this is in stone...I am always open to silmutaneous closings. Fortunately, I have a competent attorney that is on the same page as I am and is experienced with creative real estate transactions.
[addsig]