BiggerPockets

I am looking for homeowners who are willing to keep their existing financing in place. If you have any let me know and we can partner up. I offer buyers owner financing with terms similar to an equity share agreement except if they default I don't have to foreclose on them I simply evict them. If anyone ins interested please reply here or send me message and I will provide answers to all your questions. Thanks.

Angel

Beware, equity sharing as you state it is very, very close it equity skimming as the law puts it. You call it financing, but are actually doing something closer to akin of getting the title and doing a lease-back right?

Angel. Please explain how you're doing this deal so potential investors have a better idea of what exactly you're doing.

Thanks.

I would like to add that I prefer to use this method for an equity share type structure. However, it is a great alternative to lease options, wrap arounds and any other type of creative financing. Using this method does not trigger the due-on-sale clause and ensure that there is no equitable interest by any party therefore disallowing any liens to be attached to the property even by the IRS. So if the seller gets sued, so what I am not affected by it.

If I lease option the property and the buyer defaults I have to foreclose on him/her because they have equitable interest in the property. Using my approach I simply evict him/her. Actually they are evicting themselves because they are beneficiaries of the trust that set up the agreement.

I'm curious about this too. Can you go into more detail. I simply want to put my primary residence into a land trust, but I have been worried that it would trigger the due on sale. I have a great fixed rate loan from 2003, that I'm sure the lender would love to call when the rates go up and there is a change on my title to the trust.

I just got a heloc on the property, and that lender told me I have to get approval from them to put the home in a land trust.

Pay close attention to #'s 4 & 8.

Title 12 USC Sec. 1701j-3.
Title 12 CFR Sec 591 (vi)

(a) For the purpose of this section--,

(d) A lender may not exercise its option pursuant to a due-on-sale clause upon,

(1) the creation of a lien or other encumbrance subordinate to the lender's security instrument which does not relate to a transfer of rights of occupancy in the property;

(2) the creation of a purchase money security interest for household appliances;

(3) a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety;

(4) the granting of a leasehold interest of three years or less not containing an option to purchase;

(5) a transfer to a relative resulting from the death of a borrower;

(6) a transfer where the spouse or children of the borrower become an owner of the property;

(7) a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property;

(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; or

(9) any other transfer or disposition described in regulations prescribed by the Federal Home Loan Bank Board.

Angel
What is USC and CFR.?

I still do not see how this will prevent someone or some entity from liening a property. Are you a lawyer?

Now if a fractional owner of a property owed me money for something unrelated to the property I could understand how I MIGHT not be able to lien the property.

But If I did work on a property and did not get paid I believe I could lien it. Do you understand where I am coming from and do you agree or disagree with that.

Thanks for the reply.

Thank you Dawn.

Jay, you are correct in your statement, however, if you are a contractor being hired to work on the property and you were hired by the trustee therefore entitled to place a lien on the property because you were hired by the trust.

What I was refering to is since we are creating a partnership here between the seller, the investor(s) and the buyer, if the seller is sued or owes money to the IRS everyone else's interest is protected and the entity who is owed cannot place a lien on the property.

I am not an attorney but I think you will find a contractor does not need to be hired by the trust or trustee. If they complete work on a property regardless to how hires them and do not get paid the can attach it. Now you can fight it but that would be to remove the lien. You do bring up some interesting scenarios.

Jay,

In this type of agreement the trust would need to hire the contractor because all actions taken concerning the property require that all parties involved are in agreement. Meaning, that as the investor, I can't do anything without the seller and the buyer agreeing to it.