Using Land Trusts to wholesale REOs and Short Sales

[Matthew Hayes]

Hey All,

I have a few question regarding using land trusts to wholesale REOs and shorts sales. I have used the Land Trust method (ie selling the beneficial rights of the land trust instead of the rights to the contract to get around the non - assignment clause in most REO and short sale transactions) a few times already but running into problems lately.

Although the first few went off without a hitch, I've had issues with using this process recently. The first issue - the cash buyers wired in funds for closing and because of a change to the HUD at the table there was an overage check. The problem was the title company would only issue the overage check to the "buyer" who was the land trust. The end buyer couldn't cash the check because it wasn't in their name and the land trust didn't have an EIN or bank account. To make matters worst even after we got an EIN number most banks would not let him open a bank account with a land trust.

I have another cash buyer who is willing to fund the initial purchase with personal cash but then needs to purchase the property from the land trust in his IRA. I'm nervous to close the initial purchase using a land trust now because of the issue with the previous buyer but its too late to change the name on the contract and there isn't enough spread to do a double close. Someone please help??

Second issue - I recently wrote an offer in a land trust on a short sale but immediately after it was accepted the short sale negotiator required a copy of the fully executed trust agreement, including EIN #, proof of funds, and the date the trust was created.

I was lucky enough to have the buyer already lined up for this one so we moved quick and paid the rush fee with the state of IL for the EIN # but I thought an EIN # wasn't required with a Land Trust and that its purpose was to protect the beneficiary's identity? If the Trust needs to be registered and provided how does it do either of those?

Sorry, I know this is a long one but its a great method but need help ironing out the kinks - thanks!!

Matt