MM LLC Conv. Financing through Members

[Teddy Johnson]

Hello,

I've been a long time lurker and finally have decided to join the forum.

As we are doing conventional financing through members of the LLC I was thinking about financing and placing the property into a Trust and have the LLC be the Trustee and Beneficiary to keep the deals legally as part of the true owner the LLC.

Currently, there are a few properties owned by the LLC and we can cash out refi through existing members credit and buying more properties.

My question is which kind of Trust would be appropriate that would still give the LLC full control of the property?

Thanks,

Ted

[Teddy Johnson]

@Chris Mason

I was told by lender that putting the property into a living revocable Trust is not a problem.  They do not want to see the terms of the Trust nor do they have requirements or specifications of the terms of the Trust.  The lender also does not care what the Trust is called, i.e. Green Apple Trust, would be ok.

The attorney says that he would issue a LLC resolution that everyone will sign. The resolution will show that the intention is to use members credit to buy real estate for the benefit of the LLC. We then would make a member to be the Trustee and the LLC as the Grantor and Beneficiary with the option via resolution to add more Trustees in the future if necessary. The language in the Trust agreement give the power to the Beneficiary and/or Grantor to bark orders to the Trustee.

Once agreement is executed we then transfer title from Trustee to Trust through a quit claim deed so that any title company can see that the true owner of a property is a Trust. For example, via LLC resolution we designate Bill Smith as the member who will refinance a property but within a time limit will relinquish title to the Trust most likely executed in advance.

This gives double mojo by having the property in a Trust with full control to the LLC, with the LLC eventually being the rightful owner down the road.