What's up, guys
It's Clint Coons here.
And in this video I want to discuss obtaining financing
with a land trust and still maintaining your anonymity.
Okay, let's get started.
Now, here's the thing.
I have clients set up land trust.
And the way we set up these trusts, if they're not using an LLC
as the trustees, we'll create a land trust here.
And this land trust will be set up with a nominee trustee.
And that's going to be me for for many of our clients.
So the trustee, it'll say Clint Coons on the trust,
and then the beneficiary down here will be
John and Karen
as the beneficiaries of this trust.
Now, I'll give you a recent example, what I did with a client.
So they bought a piece of property years ago as a personal residence,
and we set up this trust that looks just like this.
And they took their property.
This was about five years ago when they deeded it into the trust.
So the property was deeded to Clint Coons, trustee of this land trust.
Now, after the property was deeded, I resigned my position as trustee
and I appointed John and Karen as the successor trustee.
So Jane Kay became successor trustees of this trust.
Now, the whole purpose of using the land trust in this type of scenario was that
that's not part of the public record.
So no one knows about this, that John and Karen are the acting trustees
and that I've resigned because that information isn't recorded anywhere.
Now, let's fast forward to December of this past year.
So now they decided because the property value was up,
they wanted to go and refinance and pull cash out of this property,
their personal residence that is held in this this trust.
So they called me up and they said, hey, we want to we want to suck out equity,
want to pull out $750,000 out of this property.
You're listed on title.
We don't want our name to show up, so we don't want people to know, Hey,
we're involved with this property because a lot of times
what occurs when we're dealing with financing and trusts,
people will take the property out of the trust
so that what they'll do is they'll take the property out,
put it back in their name.
Jane Kaye, for purposes of doing the refi, after they get the refi complete,
they'll put it back in the My name is Trustee.
I'll resign again and we go through that whole process.
Well, here's the problem with that.
If somebody wanted it was looking on title,
what they would see is that in 2011, the property is owned by John and Karen.
In 2014, it was transferred to Clint Coons
as trustee of the Land Trust,
and then 2020 to 2022,
it was transferred back to John and Karen in, say, July.
And then in September, it moved from John and Kiran back to Clint Coons as trustee.
Now, you would think if somebody was looking in the chain of title
that they could figure out what's going on here, that John and Karen removing it
to a land trust or some type of trust with a nominee trustee.
At least that's what I would figure out right away if I saw a title transfers
like that.
So we want to avoid that.
What we did then is I told them if you want to go through this,
the bank doesn't know you're serving as the acting trustee right now.
So when you approach your lender, so here's what we're going to do.
We're going to reappoint me as the trustee.
You guys are going to resign.
You're going to appoint me as the trustee.
So I now can step back into that role.
Now that I'm the serving trustee, go and approach your bank.
So here's the other issue.
If you want to do this with your own with the land trust,
when you go out to a bank, you're going to have to find a bank
that is not going to issue a loan that's underwritten by Freddie Fannie.
So they went to Mellon Bank
and Mellon Bank was going to treat it as a portfolio loan.
So you want to work with community banks or portfolio lenders, lenders
that are not using Freddie Fannie underwriting guidelines
because if they are and that's the first question
you need to ask, if they are using them, then this will not work.
They're going to tell you have to take it out
or you have to do a different strategy where we convert it to a living trust
to make all of this go, to put it all together.
So they found that lender and what occurred then
is they're going to now borrow $750,000 in equity out of that property.
So what we went to closing on that deal.
Lender sent out docs to me as a trustee, so they were sent to my office
at a notary. Come in.
I signed off on behalf of the trust,
pledging this asset as collateral for the loan.
I did not sign the promissory note.
My clients signed the promissory note with the bank, making them personally
liable for the loan they to gave a personal guarantee in addition
to granting consent for me to secure the asset of the trust in this transaction.
So we got all that handled, signed all the paperwork, they got their $750,000.
They had the funds wired to a trust account of which I was not a signer.
They're the signer on it.
They already opened up the trust account when they when they took over as trustees.
After that was done, I resigned.
They were reappointed as successor trustees of this trust,
and we did not lose the anonymity.
So if you want a finance and a trust, here are the key takeaways of this.
You have to work with the bank
that is going to treat the loan as a portfolio loan.
If they're a lender
that's going to underwrite with Freddie Fannie guidelines, it's not going to work.
So you have to figure that out.
And then you need to explain to them you have your property held in a trust
and that it's held by a you have another individual,
your attorney, as your trustee of that trust.
So it's a great way to hold property in a
in a in a anonymous situation where somebody is looking to title.
They're not going to see your name and you don't have to lose it.
If you're looking to get financing, you've thinking about doing this.
It's a great way, great way to put these deals together.
Wish you the very best of luck with it.
You want to learn more?
There's links in the show notes.
You can click on a strategy session. Talk to someone at my firm.
I can walk you through this in detail and help you set it up the right way.
Take care.