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Before you enter into a seller carry agreement, get protected!
Before you enter into a seller carry agreement, get protected from the pitfalls of a lease option, lease purchase, etc. Without it,
you will be at risk!
But, you can minimize those risks!
Seller carry is simply a form of lease option, lease purchase, rent to own, wrap
around mortgage, or all inclusive trust deed (AITD). These are great ways to get into home ownership without the
need for perfect credit or large sums of money for a down payment.
But, they also come with great risk. You could easily find yourself losing money, the home, or both.
There is a method to protect your seller carry home. But, before we get to
that here are some articles that you should read through just to get a feel for what can go wrong (use your back page
button to come back to this page).
Avoid the Pitfalls of a Lease Option Arrangement
When a Lease Option Goes Bad
Lease Purchase Horror Story
Combined with the problems describe in the links above, you could be face with the lender
calling the note due. Virtually all conventional loans, with the possible exception of a VA loan, will
contain a clause that prevents the above type of transactions from occurring. The lenders want to
create a new loan, more money for them. While rare these days, it is still a threat. One that we can
easily eliminate.
With all this in mind, here are some of the benefits we can offer:
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The property is protected against liens, judgments, etc.
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Even IRS and state tax liens cannot attach to the property.
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Our system helps you qualify for a refinance loan (instead of a new loan) so you can purchase with permanent
financing at the end of your lease
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Our documents spell each persons responsibilities.
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Your rent is sent to a collection management company and the mortgage
is paid by that company. The current owner cannot keep your rent and not make the payment.
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Your deposits and advance rent is keep in a contingency fund held by a non-profit company, explain below. Upon
completion of the term and requirements, it is refunded to you.
Other benefits to this method:
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You may receive full income tax write-off for mortgage interest
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You may receive full income tax write-off for property taxes
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You may receive instant equity with each lease payment
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You may share up to 100% of any future net appreciation
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You may share up to 100% of any principal reduction
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No lengthy escrows or mortgage approvals
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Enjoy 100% of the property's use, occupancy and possession
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Attain privacy of ownership
Introducing the Equity Holding Trust
The Equity Holding Trust is a method that is used to actually transfer the rights of fee
simple real estate from the seller to the buyer without the need for a new loan or a large down payment. This same
method can be use for any type of a seller carry arrangement and will give the above mentioned benefits and many
more.
By placing the home into the Equity Holding Trust, you will achieve the best possible
protection you can get until you complete the agreement you have with the seller. Along with the protection, you
gain privacy of the transaction. You will only show is a beneficiary of the home held in trust. All public
records will show the home is owned by the non-profit company acting as the trustee.
There are three steps you and the owner need to do to achieve protection of your seller carry home.
First, the seller (also known as the Settlor) will create the Equity Holding Trust. Second, in a separate action, you
will be named a beneficiary of that trust. The last step is for you to sign the occupancy agreement. Then there will
be an addendum call the Rider. This is the exceptions to how the Equity Holding Trust works to best fit the agreement you and the
seller have.
In this arrangement, your advance payments and deposits are held by the trust in a contingency fund. This is fully
refundable as long as you complete all your parts of the agreement.
As an example, if you are going into a rent to own situation, where a portion of your rent payment is going to
be credited to the principal. We would write that into the rider that a portion of the rent is to be held in the
contingency fund or the equity balance held by the seller is reduced by that amount and added to yours. Which ever
works best for both parties.
In the case of a lease with the option to purchase, the Equity Holding Trust provides you the first right to
purchase at the end of the agreement. By not making it a true option, but simply letting you have the first choice,
the "due on sale" clause is not violated.
There are many more benefits, but you should get the picture. As always, the choice
is yours, protect the seller carry venture your about to enter into or take your chances. Simply contact us
via the form below to get started.
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