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Firsttimebuy…, Home Buyer in Michigan

Short sales and land trusts???

Asked by Firsttimebuyer, Michigan Thu Jan 7, 2010

I just put an offer in on a short sale property. On the seller disclosure statement, it stated the seller, had never lived in the home and it was signed as an agent of some company. Then on the Lead Paint disclosure, it was signed "person's name" trustee of "property address" family land trust. What exactly does that mean for me. I've been searching around and don't understand it fully. I'm mostly concerned with how it will affect me buying the property. Thanks!

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My question to you is the home occupied? The bank may not follow though with a short sale on a vacant property, and it may take weeks or more to find that out. I would be hounding the agents involved for as much information as possible.
If the property is vacant and is in the redemtion period, the bank can accelerate the foreclosure process to take the home over and sell it out right.
0 votes Thank Flag Link Thu Jan 7, 2010
Dear Firsttimebuyer,

It sounds like the current owner is holding title to their property in a Land Trust. Therefore, the true owner is the Trustee (of the land trust). As the owner, the Trustee would sign all contracts (at the direction of the beneficiary).Owning property in a land trust is a great way to hide ownership and protect against liens, etc. If you would like to learn more about the benefits of using a land trust, go to: http://www.realestateforprofit.com

Randy
0 votes Thank Flag Link Sat Jan 16, 2010
The home is occupied right now.
0 votes Thank Flag Link Thu Jan 7, 2010
The seller's agent should be able to tell your agent why the home was held in a trust and never occupied by the person filling out the disclosures. Start there. Most likely it is an estate sale (the owner died). With a thorough inspection you should be able to find out anything you need to know about the house.
0 votes Thank Flag Link Thu Jan 7, 2010
Maureen Fran…, Real Estate Pro in Birmingham, MI
MVP'08
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It should be fine.

I'm aware of one program (and I'm sure there are others) involving land trusts and short sales. See http://www.landtrust.net

To oversimplify, a trust is just a separate entity that owns the actual property. Just like a corporation or LLC might own a property, a trust (or in the case of a land trust, the trustee) owns the property. Usually, the property is brought out of the trust, then sold. However, it's also possible to purchase a beneficial interest in the trust--so now you'd own the trust that, in turn, owns the home.

Most estate planners understand regular trusts. Some understand land trusts. You may want to speak to one to get a better understanding. Or ask your Realtor for a recommendation of a lawyer or estate planner to speak to. The only thing I'd caution you about--and the seller probably has this under control--is make sure the settlement company that's used understands land trusts. Some do, some don't. You definitely want one that does.

Hope that helps.
0 votes Thank Flag Link Thu Jan 7, 2010
Don Tepper, Real Estate Pro in Burke, VA
MVP'08
Contact
Hi Firsttimebuyer,

Based on what you have provided, it sounds to me that you are dealing with the estate of a deceased homeowner with a mortgage due that is more than the current value of the home. The "estate" is selling the house hoping to be approved for a short sale by the lender. In this case, the trustee of the estate would not have lived in the house. The seller disclosure is required by Michigan law; however, when the person completing the disclosure has not lived in the house, they cannot comment on the condition and must indicate as such on the seller disclosure. The signature that you have indicated appeared on the lead disclosure is typical of the situation when the authorized representative of the estate/trust is completing the paperwork.

Having said all of this, it should not impact your purchase of the home. The approval by the lender of the short sale is the main factor, and that is outside of your control...just part of the process. You need to be prepared for a long process as is typical of short sales. You may experience long periods of time with little to no feedback from the lender...understand that it is the nature of the beast.

Good luck, and I hope that all goes well for you in the short sale process.


Shirley Coronado
0 votes Thank Flag Link Thu Jan 7, 2010
Hello!

That's a great question. In Michigan a non-resident owner (corporate or trust) is not obliged to disclose the usual disclosure questions including the lead-based paint. The logic follows that because they did not live ther, they cannot have first-hand knowledge of the property details. You will be on your own (hopefully w/ a private home inspector and any other environmental inspector) to find out what is right & wrong w/ the property. Because so many homes are now corporate owned, this is happening more and more around the state. Good luck!

Jay M. Jones, Realtor
Max Broock, Birmingham
248.568.4947
Web Reference: http://www.MyRealtorJay.com
0 votes Thank Flag Link Thu Jan 7, 2010
It should not affect your purchase. If a trust is selling the property, the title company should see the trust to make sure the proper person is signing off. Good title is your goal. No disclosures - just inspect to your satisfaction.
0 votes Thank Flag Link Thu Jan 7, 2010
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