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Updated almost 16 years ago on . Most recent reply

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Will Barnard
  • Developer
  • Santa Clarita, CA
10,947
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15,749
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Bring it on sub2 specialists

Will Barnard
  • Developer
  • Santa Clarita, CA
ModeratorPosted

I have not personally, but several have used land trusts in their sub2 strategies. My post is not to question land trusts or their value, but to question if it is necesary or a wasted step and money in applying them to sub2?

How many of you use them in your sub2 transactions and why?

One thing that concerns me: Disclosure
Land trusts in a sub2 transaction are used to "hide" the fact that title has changed hands as to avoid the due on sale clause (DOSC for short). In doing so, are you not engaging in a decietful practice and therefore committing sometime of fraud?

Also, if you do use LT's in a sub2, are you not keeping future risk alive of the DOSC once the lender does find out? Let's face it, LT's are not a secret to lenders and the reason people use them are no secret either, so question 2 is, if you use them, the lender knows that the title was placed into a trust and could be suspicious keeping your risk of the DOSC open for the future.
Am I missing anything here?

Wouldn't it be better to just disclose up front and thus protect yourself for any and all future possibilities of a DOSC?

I have not disclosed in the past and have never used a LT on a sub2 but am considering the full disclsoure upfront and create a "statute of limitations" (for lack of a better term as I am not an attorney and am not implying this would be a statute of limitations)

What are your thoughts? :D

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