Comment by Henry on 8/15/2008 9:09:52 PM
What is the max. of profit that you can make in this kind of deals under  a Land Trust.  and do you have to disclosed to the Lender (if Short Sale) that you will sell to a third party?

Thanks,

Comment by Randy Hughes on 8/24/2008 3:09:25 PM
Henry,

There is no maximum profit. It depends on the deal you negotiate with the seller as to how much profit you will make when you re-sell. It is best to negotiate with sellers that have large equities in their property.

No, you  do not have to disclose that you are selling to a third party. The short sale lender knows that you will either keep the house or re-sell it. Frankly, the lender does not care how much money you make. Their primary concern is that the seller/borrower does not receive any of the proceeds.

Comment by Henry on 8/25/2008 11:33:08 AM
Thank you for your advice!
So, you saying that the lender does not care....but if you are selling to a third pary and making a big profit, isn't tha consider a fraud to the Lender?

Comment by Terry on 8/27/2008 3:08:36 PM
If I were to use a land trust to accomplish a simultaneous closing on a short sale, how do I complete the HUD?  Also, lenders want the HUD to "zero out" so how can I get the HUD approved if my profit is stated on the HUD?

Comment by Ed Bisquera on 9/13/2008 11:18:22 AM
Hi Randy,

Can this work for a property being sold through a Realtor? And don't you have to have title deeded to the new Land trust you just created to put the property under contract through a Land Trustee first or am I mixing up transactions here?  I'm familiar with having done loans for people buying in this fashion, but would like to know how to place a property under contract utilizing the Land Trust and than assign the beneficial interest to a third party, who will be the one actually getting a loan to buy they property.  

My understanding also, is that they are buying the "assignment" so the terms of the contract on, let's say a short sale I negotiate and can get a P&S agreed upon, is the terms on which the third party is agreeing to, right?  The third party buyer must be made to understand that the terms and contract have already been negotiated and they are simply buying the property with terms and contract in place, is my understanding.  And to keep things anonymous and shielded, I could name the beneficiary an LLC, which than assigns the beneficial interest to the third party, right?

And since they now have beneficial interest or "ownership" in the trust, the only time the trust documents even gets dealt with, is at closing is to instruct escrow on how to deal with payouts, correct?  Or can a separate instruction form be sent to escrow?

I know the P&S agreement goes to lender with loan package, but the lender will never ever need to see the land trust agreement, right? At least I've never ever seen it asked for yet, other than disclosing that the "end" beneficiary of the trust is the person guaranteeing and obtaining the loan.

To me, that justifies an assignment fee, since in reality a short sale negotiation can take weeks if not months just to have an agreed upon contract finally signed and approved.  A person could buy the beneficial assignment after someone else (me) has done all the dirty leg work, right?

Thanks in advance for your post.

Ed Bisquera

P.S. Would you be available for a webinar and/or seminar for folks in my area that I can promote?  I also have an event company that puts on events and seminars and now going to be putting on a Home Buyer Bus Tour (pretty much like the Foreclosure Bus Tours that is a growing trend across the US).  I'd be interested in seeking your cost for such a venture.  Thanks!  Ed

Comment by Kesha Hamilton on 10/5/2008 1:54:25 PM
Hi Randy,

Let me make sure I understanf this strategy correctly...So for ex. if you had an agreement w/ the seller for $100k, you found a buyer to purchase it for $120k and assign over the interests to that person..How does the profit come to you? Is it classified as an assignment fee on the hud? In other words, how exactly do you capture the profit in between and keep it from going to the seller and direct it to your pockets after you've signed over your rights??

Comment by Craig Warner on 11/9/2008 7:53:41 AM
When you are trying to negiotate with the mortgage holder for the short sale do you disclose the buyer being the trust or or myself?

Comment by Bobby on 11/25/2008 2:55:48 AM
You stress individual land trusts for each property, am I correct that you formed your Land Trust before you made your offer and came to terms with the bank?,

Comment by Bobby on 11/25/2008 10:55:41 AM
The "Buyer was you Land Trustee", was the Trust formed at the time you started negotiations?

Comment by Kristie on 1/23/2009 12:41:12 PM
When in the closing process do you assign the benefical interest so you don't have to pay the closing? When and how does the assignment fee get to you in this process?

Comment by Vicki on 2/9/2009 7:08:19 PM
Satisfying the seasoning requirement is hugh, how does the new buyer change the trustee?  

Comment by Christian on 2/20/2009 1:14:08 AM
Hello Randy, in your case or this story, you used your own land trust trustee, now once you sold you beneficial interest to your end buyer, what happens with the title being held by your trustee?  The end buyer might not like it? how he will change the trustee?  Any recording documents you used in this case?  Explain please..

Comment by Catherine Coy on 3/2/2009 11:57:22 PM
Lenders are more and more seeing the insertion of a trust and then a sale soon thereafter as an attempt to circumvent the due-on-sale clause and seller title seasoning.  The obvious question is: "why would a seller initiate a trust, only to soon thereafter sell the property?"  Good question, isn't it?

Comment by Frank Hampton on 3/13/2009 11:27:38 AM
When the beneficial interest is assigned to a third party (double closing) the trustee remains the same. Now the third party controls the trust and the trustee. How does the third party change the trustee or what if they want to refi the property and take it out of the trust. How is this accomplished?

Comment by matilda on 3/30/2009 11:48:11 AM
When you completed the Purchase and Sales agreement, what did you write as buyers name?
What did you do to show earnest money?  Do you provide a check if offer is accepted only and if so, is it a personal check?
How did you show proof of funds?  Do you show proof of funds only if offer is accepted?  Are the POF under your personal name or the trust name?
Do you add any contingencies to the P&S contract that are going to allow you to get out of the deal in the event you don't find an end buyer?  If so, what?
When you form the Land trust, do you show your personal name as trustee?
Then when you find the end buyer, do you make them beneficiary of trust?
What agreement to you use between you and end buyer to ensure that you are getting your fee upfront prior to closing?
When the end buyer closes on prop under the LT name, he is beneficiary, but you are still listed as trustee.  Do you then do a quit claim deed to transfer title to end buyer or how do you remove yourself completely from trust?
Thank you.
Matilda
Mid-Atlantic Property Management, LLC
908-910-9934

Comment by Andrew on 6/28/2009 4:32:55 PM
Randy I'm not quite sure I follow your original post.  I have several questions which I've outlined below.  I hope you can respond to all of them as to me they are all critical issues and without a complete understanding it doesn't seem like using a Land Trust has much benefit when it comes to a simultaneous closing.


You're saying that the Land Trust is initially setup as follows:
Grantor: Defaulting Homeowner
Beneficiary: Flipper Investor/me
Trustee: Exit Buyer

This move into the Land Trust happens when?  The day the distressed  homeowner agrees to my terms and signs all of my paperwork including contract to purchase?  More likely it would be after that, at the point in time I find my exit buyer?  

What if the exit buyer falls through for whatever reason?

Eventually, the short sale lender (hopefully) approves the sale.  Once that happens, through ESCROW I assign my beneficial interest in the LT for my spread.  (I don't know my exit buyer and he doesn't know me.  Escrow needs to be used because he won't wire me the money until I give him the assignment, and I won't give him the assignment until he wires the money.  Classic standoff.  Only solution is escrow, right?)  Further, we've now changed this from a simultaneous close where my spread is private, to an assignment where the exit buyer is now well aware of my profit (assignment fee).  I don't know about the people you deal with, but the people I frequently deal with don't think anyone but themselves should be making a substantial profit.

Now the biggest issue of all.  An FHA lender has pre-approved the exit buyer for a loan.  They notice the transfer into the Land Trust on the public record that happened 3 months ago and decide to not approve the loan because they think something funky is going on to - oh I don't know... avoid title seasoning issues ?  What now?

Thank you