Acquisition through a Trust to maintain a Low Interest Rate

[Aaron Sallade]

Is anyone familiar with the investment strategy of acquiring a property through a Trust to take over payments from a seller and maintain their interest rate and lender (typically due a financially distressed situation)? I am curious to learn more about how it works and the tradeoffs with the approach.

[Chris Seveney]

@Aaron Sallade

Another term is called subject to or sub2. Lots of info here on BP about it.

[Aaron Sallade]

Very helpful, thank you!

[Don Konipol]

Quote from @Aaron Sallade:

Is anyone familiar with the investment strategy of acquiring a property through a Trust to take over payments from a seller and maintain their interest rate and lender (typically due a financially distressed situation)? I am curious to learn more about how it works and the tradeoffs with the approach.

Purchasing through a trust does not negate the due on sale clause.  There was a claim, at one point, that if the seller placed the property in a personal trust (at this point the due on sale clause is not triggered), then transferred 99% beneficial interest in the trust to the “buyer”, that this negated any due on sale clause.  Courts have unanimously ruled differently.  
I guess to a degree obfuscating a title transfer can work, but the lender can still accelerate the note when and if they become aware of the title transfer. 

[Chris Seveney]

@Aaron Sallade

Just remember if there are any other outstanding debts / lawsuits or future lawsuits with the trust you would be assuming those as well.