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  • #1339
    Avatar of anonymous
    anonymous
    Member

    I have a homeowner in Connecticut who wants me to do a trust deal with them as the resident beneficiary. How do I set this up and where do I start witht the paperwork?

    #13224
    Avatar of joecain
    joecain
    Member

    Billy -

    There is more than one answer to your query:

    1.

    #13225
    Avatar of sserio
    sserio
    Member

    Joe,

    This sounds like it could be done as a PACTrust (2 party trust), with the homeowner being the settlor/resident beneficiary and the investor being the co-beneficiary (investor beneficiary).

    As far as how the beneficiary interest is split between the 2 parties is obviously negotiable.

    Sal

    #13226
    Avatar of anonymous
    anonymous
    Member

    I am a new member as of last week. I can sign on to the members area, but for some reason cannot sign on to this board. I will need an investor to help me with this Connecticut deal. You can contact me at 631-786-4022 or email me at Adhc23@msn.com. I am getting all the information from the homeowner this morning. Thanks for your help.

    #13227
    Avatar of sserio
    sserio
    Member

    Billy,

    If you can get into the Members Section, then have you looked to see if there are any Network Members in your area … I didn’t look, but that is probably a good place to start.

    Also, put a post in the section for ground partners … I’m sure someone will reply from that area and if that doesn’t work call NARS and ask them if they can refer you to someone who can assist you with your transaction.

    Best of Success,
    Sal

    #13228
    Avatar of anonymous
    anonymous
    Member

    Joe!

    RE: Your Reply messge to Billy on May 27th, 2005, 3:42pm

    QUESTIONS:

    Item #2: Who Can be the Trustee?

    #13229
    Avatar of joecain
    joecain
    Member

    First of all, thank you to Sal for assisting on this topic. I did not monitor this board over the holiday weekend and appreciate your help.

    Now, on to Tony’s questions:

    1)

    #13230
    Avatar of anonymous
    anonymous
    Member

    Joe!

    Thank you for answering my questions and helping me to understand the process. Joe, by the way….. in respond to Q# 2 above you wrote:

    ” the Investor or responsible party would record the Title Transfer (Deed) at the Recorders Office in the County of Record”.

    #13231
    Avatar of Administrator
    Administrator
    Keymaster

    Joe,
    I have a question regarding Sal’s input on the SB and the RB beneficiary being one and the same.
    What if the SB defaults on payments as the RB in the trust agreement it would seem a conflicting dual role to be done that way. If you can that is interesting to say the least. How would one address the RB missing payments..??

    #13232
    Avatar of anonymous
    anonymous
    Member

    Joe!

    Thank you for answering my questions and helping me to understand the process. Joe, by the way….. in respond to Q# 2 above you wrote:

    ” the Investor or responsible party would record the Title Transfer (Deed) at the Recorders Office in the County of Record”.

    #13233
    Avatar of joecain
    joecain
    Member

    First, to Tony:

    In the upper left corner of most Title Transfers, if you choose to do this yourself, “Recording Requested By” is generally the Settlor Beneficiary (or current home owner) and “When Recorded Mail To” is the Trustee that the property title is being transferred to. “Mail Tax Statements To” is also the Trustee.

    Now to Colvegas:

    The point you raise is the very reason that it was suggested to me to separate out the Property Owner as SB & RB exactly because they have different rights and responsibilities, which are clearly delineated in our Beneficiary Agreement.

    Now here is why: If the RB should be delinquent to the point of being in violation of the Occupancy Agreement that they have signed, the Trustee as Landlord of the property can begin the process of eviction of the RB as per the Trust Docs and whatever local laws govern such actions. However, as SB, they still possess at least 10% of the Beneficial Interest in the Trust so as not to cause the Lender to call the Note due and payable. This is for the duration of the Trust, regardless of whether they default as RB.

    On the RB’s missed payments during the eviction process: The Contingency Fund shall be used until exhausted, and then it will be the IB’s responsibility to make these payments or find a new RB. If this sounds somewhat unpalatable to you, please remember the real estate investing is a risk and with high rewards, there are sometimes high risks.

    About percentages and voting rights: All Beneficiaries of a Trust have equivalent voting rights regardless of their percentage of Beneficial Interest. 10% or 90% of the interest, their vote counts as one, with an exception being if you choose to have the SB sign away his voting rights to you via a Limited Revocable Power of Attorney, which we can provide for you as part of the Trust Docs.

    Your last question is one I get all the time and my only answer is that all deals are different. If you “feel” uncomfortable putting together a foreclosure bailout type of transaction, then please don’t. Or, ask the RB for more of a Contingency Fund, say three months. Or, create for yourself a list of potential RB’s that you can use in that area of the country in your current RB defaults.

    Also, please note that not all property owners that get into financial trouble remain there. One that came across my desk recently, the SB had just gone through a divorce and was nearly wiped out in the settlement which included a tidy sum to buy out the spouse on the property. Soon, the SB became overwhelmed and fell way behind on the mortgage payment, taxes and insurance. Then, to make matters worse, he lost his job. Needless to say the SB needed to be bailed out and one of our investors did just that, paying off the arrearages and bringing the property current as we placed it in a Trust using the model above.
    The SB got a new, lucrative job and the Contingency Fund was set at three months, just in case. So far, all has worked out quite well. The SB got to retain their property without a foreclosure or BK and the IB was assigned a percentage of the Beneficial Interest and a corresponding percentage of Profit on a property in a rapidly appreciating market, so they made a couple of pennies. By the way, if all had not turned rosy and the RB had defaulted, the next purchase option would go to the IB, who could then purchase the property outright or make it available for sale at Fair Market Value to a third party, thus ensuring their receipt of profit after the sale out of the Trust.

    Hope that answers the questions. The bottom line is that all deals have nuances, making them all different. Never a dull moment. Oh well, back to generating Docs …

    #13234
    Avatar of anonymous
    anonymous
    Member

    Joe!

    In the above Scenario, when preparing DOC’S for a “Foreclosure Bail out”…..SB stays in the house(renting from Landlord/Trustee).

    Who is deducting active and passive deductions? since SB is RB at the same time how the beneficial interests are assigned (SB(10%…DOS), IB(80%) and RB/SB(10%)? Seems a little bit confusing.

    Would you please elaborate? Thanks.

    #13235
    Avatar of joecain
    joecain
    Member

    Tony -

    Honestly,

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