Can you really sell a Trust?

[Tony Coles]

Recently, a very seasoned note investor mentioned they buy notes in a trust so they can sell the TRUST to a buyer, not the note. This way they avoid closing costs and other associated fees, etc. I was unable to clarify what they meant and/or how in the world they were doing that. I am in Arizona. Does anyone have any idea what they were talking about? How can you sell a trust?

[Bob Malecki]

I've been using personal property trusts for the past five years when acquiring mortgage notes with my IRA, and they are a great, low-cost entity for maintaining privacy since the assignment is recorded in the county where the property is located.

Now, you can't technically sell the trust, but you can sell the beneficial interest in the trust. You would want to create a mortgage loan purchase agreement that specifies the transfer of the beneficial interest in the trust as part of the sale of the note. Once the funds are transferred then the trustee would execute an assignment of beneficial interest to the buyer or the buyer's entity. 

Since the note is still "owned" by the trust there would be no need to execute and assignment of mortgage and allonge. Eventually the buyer would probably want to replace the trustee with his or her own trustee and that is facilitated through a resignation of trustee procedure.