Home › Forums › General › EHTrust/EHT Topics and Creative Real Estate Financing › Skirting the Law—EHTrust and PacTrust
February 13, 2011 at 3:24 am #6662
Hey guys, I did a little research on the laws and I came across something interesting, I was wondering how the PacTrust and EHTrust is structured to get around USC Title 12 Chapter 13.
It seems like the intention of the law is pretty clear.
????1701j???3. Preemption of due-on-sale prohibitions
(b) Loan contract and terms governing execution or enforcement of due-on-sale options and rights and remedies of lenders and borrowers; assumptions of loan rates
(1)Notwithstanding any provision of the constitution or laws (including the judicial decisions) of any State to the contrary, a lender may, subject to subsection (c) of this section, enter into or enforce a contract containing a due-on-sale clause with respect to a real property loan
(2) Except as otherwise provided in subsection (d) of this section, the exercise by the lender of its option pursuant to such a clause shall be exclusively governed by the terms of the loan contract, and all rights and remedies of the lender and the borrower shall be fixed and governed by the contract.
The only exemptions given in subsection (d) are for leases that are shorter than 3 years. Aren’t the trusts longer than 3 years generally?
(d) Exemption of specified transfers or dispositions
With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon???
(4) the granting of a leasehold interest of three years or less not containing an option to purchase;
(8 ) a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property;
Any input would be great, as I find these trust vehicles to be fascinating!!August 28, 2011 at 11:36 pm #33480
I ran across this other day and was just wondering the same thing…August 29, 2011 at 12:59 am #33481
The most beautiful thing about the PacTrust, EHTrust PATENTED SYSTEMS, is the meticulous care given to comply with details of Federal Law.
The system consists of several different documents, each with their own purpose, each stand-alone document prepared exactly correct, many documents are fully executed (signed) on DIFFERENT DAYS (not the same day). Stand alone documents means the Trust document is the trust document. The Occupancy Agreement (Lease) Document is just that. These documents are not combined. These documents are not executed on the same day. The lease document is LESS THAN 3 YEARS, then goes to month to month. Again, this is a complete system. As we verbalize (talk) about PacTrusts and NehtTrusts, we tend to talk about the system as a whole. However, when it’s time to actually put a binding transaction together, every i is dotted, every t is crossed, every document completed correctly, every documents signed when it’s supposed to be signed. Great care taken.
A lot of “real estate type folk” get frustrated at the thought of following “rules”. So what do they do? Cut corners. Make their own rules. Then say to themselves “it doesn’t take all that”, I’m gonna do things MY Way. Well, guess what, “MY Way” is potentially fraught with all manner of key legal DETAILS left out or ignored, or flat done wrong. Key elements ignored. Key details trampled over. All in the name of “saving time”. This system ain’t new. Time tested. Battle tested. Court tested. Triumphant. Keep asking. There are answers. Hope that helps.August 29, 2011 at 1:26 am #33476
Awesome, thanks Kevin! This was the part that seemed obvious but I didn’t see it mentioned anywhere:
“The lease document is LESS THAN 3 YEARS, then goes to month to month.”
I appreciate the backstory too about the process, different days etc, it’s these nagging little questions that add up to hesitation, so thanks for chiming in and clearing things up!August 29, 2011 at 2:40 am #33478
The Lease does not convert to a Month-to-Month Lease. The Lease does not convert to anything, it remains in place on a Day-to-Day “Hold Over”. Extending the Lease, including on a Month-to-Month basis violates Sec 12.
Also, the “Trust” does not relate to or grant any rights of Occupancy.
The PAC/EHTrust ARE NOT Patented. The “Process of Documentation” is Patent Pending. During the review process, which can take years, a patent number is given which does allow us to sue anyone who we believe is violating our process. We have done so and prevailed each and every time. We also know that there are many violators of our process and at some point we may choose to pursue it.
What is interesting is that many have tried to duplicate the NARS Process of Documentation and have fail miserably. Some have gone as far as actually copying our documentation without even bothering to remove the copyright (idiots). Some have even used our documentation and named us as trustee without or knowledge, consent or remuneration (idiots).
Needless to say, it is extremely important when attempting to complete a PAC/EHTrust transaction, that you use the full NARS Process of Documentation. Doing so will make you transactions go much smoother and without any more risk or liability than absolutely necessary. If you choose to take a short-cut, you will either get lost in the woods and eventually get eaten by the BIG BAD WOLF.August 29, 2011 at 2:52 am #33479
Listen to Scott (I do)! lol. I knew my wording was gonna be “off”… but my intent and spirit were pure lol. But don’t worry, guys and gals… when you have a transaction going, the pro’s will help you get it closed (as they did for me on my one and only thus far). Thanks for the assist, Scott.September 5, 2011 at 12:39 am #33477
Scott, you are one smart sun uv a gun (your Pappy was probably a real pistol…you know “Drink till midnight then pistol dawn). You know pistol: son of a gun. Ho ho (OK not funy, but I tried).
Folks, it is VERY rewarding to see so many of my former students who are so very knowledgeable when it comes to the PAC and NEHT trust concept and the condundrums facing it. Remember the governing law is 12 USC 1701-j-3…read that first and you’ll see how it relates to 13 USC.
One biggee to watch out for is the diffence between the USC (US Code) and the CFR (Code of Fed. Regs). UNderstadn that nothing in title 12 of the CFR has ever been enacted as law, and is NOT the law (see 12CFR 591(vi), no matter what doofus attorney tries to tell you otherwise. As anyone can determine for themselves by reading Title 1, the CFR’s Title 12 has never been enacted as law by the Office of the Law Rvision Counsel or the Office of Thrift Supervision, and is only (very weak and misworded) prima facie evidence of the law as it stands under 12 USC 1701, This is per the Law Revision Council of the US House of Representatives.
If anyone ever tries to throw you with the CFR or Title 13 argument, tell them to read Title 1 of th e CFR and go back to law school to research the true regulations under title 12 of the U.S. Code of Laws.
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