Will Recording Deed Alert Bank?
After one purchases a property 'Sub to' will recording that deed under the buyers name cause the existing mortgage holder to be alerted?
How does one then purchase insurance? The current mortgage only covers principle and interest. Taxes and insurance are paid by the owner.
What's the best way of getting landlord's insurance on this property? Will the insurance co. send any paperwork to the bank?
Another quick question I have is state specific -
why is it that in Florida, when transferring a property from an individual to a corporation, the doc stamps payable are on the Value of the property rather than the sales price? This is what I was told I would have to pay by someone at the Dept. Of Revenue when making enquiries about filling out form DR 219
No, recording the deed itself will not tip off the lender.
If you buy sub2 on a property that has no escrow, you handle it the same as a property that does have escrow. You get the insurance that you need and pay for it yourself. The tax bill will now be sent to the address you specify in the name you title the property. You pay the tax bill. It really is simple.
William Tingle
WilliamGA
Thanks for the reassurance. Will do!!!!!
Quote:
On 2003-12-27 18:20, WilliamGA wrote:
No, recording the deed itself will not tip off the lender.
If you buy sub2 on a property that has no escrow, you handle it the same as a property that does have escrow. You get the insurance that you need and pay for it yourself. The tax bill will now be sent to the address you specify in the name you title the property. You pay the tax bill. It really is simple.
William Tingle
WilliamGA
WilliamGA,
Getting insurance is easy enough, but won't the lender be notified when you (new owner via 'Sub/To') are listed as primary beneficiary if loss occurs?
Luke
Luke,
I use a trust to get this done and have never had a problem. It is just another reason I like to use them.
William Tingle
WilliamGA
What if one does not use a trust? Any recommendation there?
Since you are in Palm springs you shoul explore "title holding trust". Check it out at foreclosure forum . com. It is a must for you since I know you don't want to pay $800.00 per year for many LLC's.
Once you transfer to THT, you are gold. Loan holder thinks property was transferred to trust for old owners benefit, and all red flags are bye bye.
Sorry, I don't have info if you do not put in trrust....you may want to flip so you don't have to look over your shoulder for the due on sale clause to kick in.
PS. THT avoids 3.33 cali state tax witholding.
[addsig]
I just want to point out that a trust and an LLC are two different things used for two different reasons.
A trust in this case is used primarily for privacy purposes and possibly ease of conveyence. Trusts are tax neutral for federal income tax purposes in that according to the IRS, transfering title into a trust is a non-event (i.e., no tax consequences--good or bad). I am not sure where the 3.3% state tax savings come in. I have never heard of that. I would love to hear more though.
An LLC, as well as a Corp, is business entity used for asset protection and possibly tax benefits. One is not really a substitute for the other.
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RS (So. CA) [ Edited by Rogue on Date 01/05/2004 ]
Thanks for the clarification on those issues guys. Oh! by the way, I'm in palm Springs FLORIDA - a couple of miles away from the one in California.
Does anyone have any Florida specific info? Have a nice day gentlemen
I think what everyone here is saying to you, without pointing you to a course or book, is that you need one with an explanation and system for doing these.
I'll not violate policy here either and suggest a specific one. There are plenty of good ones out there.
For a preview of perhaps one way, which I admittedly prefer, to get these types of deals done.
First don't take title direct, orat all.
Have the seller deed the property to a trust. Record that deed, because the seller owns the trust at t
at point, no transfer tax is due.
Next, get the seller to assignbeneficial interest in the trust to you entity (corp. LLC etc,).
Of course ,the trustee isone of yiur choosing.
When the seller assigns int in the trst to you, you own the house.
There are PLENTY of other vital docs, and subtle details to address, inadditiin to good solid due dikigence.
These sub2 deals are great, and lucrative.......but must be done right.
Since yiu are in FL, surely a local club can refer an attny to get it written up and do title work.
Plus,there are Plenty of us here doing/teaching these techniques all over our state.
Yiu are in perhaps one of THE best states for sub2 deals.
I;ve found more folks here, from attny's, tobrokers, sellers and other R.E.I.'s who understand sub2 my way, than any other market I've worked.
Stick around here, good info and lots of help.
Good Luck to you,
Jim FL