Posted on: 01st Oct, 2007 10:29 am
Situation:
Trust in Suzie's Name to protect Suzie and her 2 kids.
Suzie's Father John is Co-Trustee just in case needed.
John loaned Suzie $400,000 to buy $400,000 house 1y ago.
Suzie now wants a $150,000 Mortgage to pay off Dad along with money market money of $250,000 she has.
More below:
During a recent separation, Suzie Smith has a real estate attorney draw up a Trust with Suzie's name on it as well as Suzie'e father John Doe so that Suzie can purchase a home for $400,000 and Father John loans her the $400,000 until the divorce is completed when Suzie will receive $400,000 for her half. At that time (right now), the plan was Suzie would get a $150,000 mortgage, pay her Dad John back $250,000 in cash plus the $150,000 from the new Mortgage.
Suzie is dealing with a fairly new bank in the Orlando, FL area that has assets of about $100m and this is their 41st Mortgage they have done as they build the Mortgage business.
Suzie naturally wants to keep her Dad John on the Trust as a Co-Trustee. The Bank is saying the Dad John has to stay on the Deed. Suzie and John do not want John on the Deed, no need for it. Bank is saying to get John's name off the deed will require approx $1400 in Doc Stamps and maybe a Quit Claim type maneuver. A local attorney has drawn up language on how all of this works and sees no reason why John can not stay on as Co-Trustee and not be on the Deed (no problem, no doc stamps).
How does all of this work?
Is this bank just too new to the Mortgage market to know?
There was talk about a Quit Claim to get John off the Deed or something like that which apparently generates Doc Stamps?
Bottom line, is it possible for Suzie to get a Mortgage for $150,000, pay off her Dad John, and not have John on the Deed without incurring additional expenses, real simple?
Thank you!
Trust in Suzie's Name to protect Suzie and her 2 kids.
Suzie's Father John is Co-Trustee just in case needed.
John loaned Suzie $400,000 to buy $400,000 house 1y ago.
Suzie now wants a $150,000 Mortgage to pay off Dad along with money market money of $250,000 she has.
More below:
During a recent separation, Suzie Smith has a real estate attorney draw up a Trust with Suzie's name on it as well as Suzie'e father John Doe so that Suzie can purchase a home for $400,000 and Father John loans her the $400,000 until the divorce is completed when Suzie will receive $400,000 for her half. At that time (right now), the plan was Suzie would get a $150,000 mortgage, pay her Dad John back $250,000 in cash plus the $150,000 from the new Mortgage.
Suzie is dealing with a fairly new bank in the Orlando, FL area that has assets of about $100m and this is their 41st Mortgage they have done as they build the Mortgage business.
Suzie naturally wants to keep her Dad John on the Trust as a Co-Trustee. The Bank is saying the Dad John has to stay on the Deed. Suzie and John do not want John on the Deed, no need for it. Bank is saying to get John's name off the deed will require approx $1400 in Doc Stamps and maybe a Quit Claim type maneuver. A local attorney has drawn up language on how all of this works and sees no reason why John can not stay on as Co-Trustee and not be on the Deed (no problem, no doc stamps).
How does all of this work?
Is this bank just too new to the Mortgage market to know?
There was talk about a Quit Claim to get John off the Deed or something like that which apparently generates Doc Stamps?
Bottom line, is it possible for Suzie to get a Mortgage for $150,000, pay off her Dad John, and not have John on the Deed without incurring additional expenses, real simple?
Thank you!
I have a question. Does the trust actually own the home?
I have finance properties that are owned by a trust and the lenders always required it to be switched to the owner themselves. And whoever is getting the mortgage is who they will want on the deed. Now that is not to say that they can't switch it back at a later date. And yes I see no reason he would come off the trust as it will no longer own the home.
And if they are financing it to the trust. Then that is why they want his name on everything as he will be partially liable.
I have finance properties that are owned by a trust and the lenders always required it to be switched to the owner themselves. And whoever is getting the mortgage is who they will want on the deed. Now that is not to say that they can't switch it back at a later date. And yes I see no reason he would come off the trust as it will no longer own the home.
And if they are financing it to the trust. Then that is why they want his name on everything as he will be partially liable.
Yes the Trust currently owns the house. Yes they are switching the house to the owner's name. And we desire to have only the owner on the deed. And yes we want to keep the father on the Trust.
So then, are there extra Doc Stamps involved or not since the Deed is coming from the Trust (Suzie's Family Trust with John (father) as Co-Trustee) to Suzie the individual?
Our local Real Estate Attorney says no and that the local lenders and title folks need to see the latest deed or doc stamps laws?
Can you comment, confirm, or help clarify?
Thank you
So then, are there extra Doc Stamps involved or not since the Deed is coming from the Trust (Suzie's Family Trust with John (father) as Co-Trustee) to Suzie the individual?
Our local Real Estate Attorney says no and that the local lenders and title folks need to see the latest deed or doc stamps laws?
Can you comment, confirm, or help clarify?
Thank you
The loan can be done in the name of the trust......it's a small local bank.....work with a bigger bank or a broker and it shouldn't be an issue.
Is the home in Orlando area or just the bank? I will try to find out some answers for you.
It is not unlikely that if the lender is not from your area they just aren't familiar with your local laws. However if their investor has something against it in their guidelines then you have a problem. You could go through all the trouble and find out they can't do the loan anyway.
Where I live, I believe you pay whenever a property transfers title unless it is a special gift situation. Since this transfer is to pay off debt and it is from a trust which for all intents and purposes you could look at just like it is a person and they are selling it. It is being sold from the trust to her alone. So the doc stamps are for that transfer I assume.
Now obviously I am not an attorney and I cannot give legal advise. So I don't see why the local attorney would be wrong and I can see how the lender could be wrong.
Let me know where the house is and I will try to look up the law.
It is not unlikely that if the lender is not from your area they just aren't familiar with your local laws. However if their investor has something against it in their guidelines then you have a problem. You could go through all the trouble and find out they can't do the loan anyway.
Where I live, I believe you pay whenever a property transfers title unless it is a special gift situation. Since this transfer is to pay off debt and it is from a trust which for all intents and purposes you could look at just like it is a person and they are selling it. It is being sold from the trust to her alone. So the doc stamps are for that transfer I assume.
Now obviously I am not an attorney and I cannot give legal advise. So I don't see why the local attorney would be wrong and I can see how the lender could be wrong.
Let me know where the house is and I will try to look up the law.
Here is a link to the best info I could find. From what I read every real estate transfer unless it is a gift is subject to the tax.
http://dor.myflorida.com/dor/taxes/doc_stamp.html
I'm reading through the laws right now and all I can say is WOW. Florida law is mind boggling. I thought Kentucky law was complex but compared to Florida law it is like being written for a 1st grader instead of a 12th grader. I honestly think that a lot of attorney's would have a hard time understanding it. Oh well it'll just take some time. Be sure to let me know that you are in Florida.
http://dor.myflorida.com/dor/taxes/doc_stamp.html
I'm reading through the laws right now and all I can say is WOW. Florida law is mind boggling. I thought Kentucky law was complex but compared to Florida law it is like being written for a 1st grader instead of a 12th grader. I honestly think that a lot of attorney's would have a hard time understanding it. Oh well it'll just take some time. Be sure to let me know that you are in Florida.
Hi Toomes,
Let's assume that John is not on the deed but on the trust, and Suzie's able to get a loan against the home in her name only. Now, if Suzie defaults, the lender will be at risk and won't be able to recover the loan balance from her. So, the lender has to do a foreclosure or allow Suzie to sell off the porperty to pay off the loan.
However, if John is on the deed but not on the loan, then the lender can ask him to pay off the loan if at all, the father and daughter wish to keep their home. But if John disagrees because he's not on the loan, even then the lender can demand it from him provided the trust owns the home and John has the rights of a co-trustee.
Hope this helps...
God bless you.
Samantha
Let's assume that John is not on the deed but on the trust, and Suzie's able to get a loan against the home in her name only. Now, if Suzie defaults, the lender will be at risk and won't be able to recover the loan balance from her. So, the lender has to do a foreclosure or allow Suzie to sell off the porperty to pay off the loan.
However, if John is on the deed but not on the loan, then the lender can ask him to pay off the loan if at all, the father and daughter wish to keep their home. But if John disagrees because he's not on the loan, even then the lender can demand it from him provided the trust owns the home and John has the rights of a co-trustee.
Hope this helps...
God bless you.
Samantha
Hello James,
If the house is owned by the trust then automatically John as the co-trustee will be liable to pay the mortgage in case of Suzie's default, even if he is not there on the deed. That's why the mortgage company wants to make it clear from the very beginning. If both the names are there on the trust, it is better to have both their names on the deed in order to avoid complication. If not, only Suzie's name should appear in both the cases.
If the house is owned by the trust then automatically John as the co-trustee will be liable to pay the mortgage in case of Suzie's default, even if he is not there on the deed. That's why the mortgage company wants to make it clear from the very beginning. If both the names are there on the trust, it is better to have both their names on the deed in order to avoid complication. If not, only Suzie's name should appear in both the cases.
The Home and the Bank in Orlando, FL. The mortgage wholesaler the bank is using is in Ocala, FL, about 1 hour away.
Copy of Statute we found = Fl. Admin Code, Chapter 12-B4 on Doc Stamps includes sub-Section 12B-4.013(32)(a):
"No Change in Beneficial Ownership: A deed from X to a trustee is exempt from the stamp tax to the extent of X's beneficial ownership interest as a trust beneficiary, whether or not the real property is encumbered by a mortgage."
Copy of Statute we found = Fl. Admin Code, Chapter 12-B4 on Doc Stamps includes sub-Section 12B-4.013(32)(a):
"No Change in Beneficial Ownership: A deed from X to a trustee is exempt from the stamp tax to the extent of X's beneficial ownership interest as a trust beneficiary, whether or not the real property is encumbered by a mortgage."
Hi,
What I can make out from the code is that you have to pay stamp tax on the portion of the property which is not in your name. For eg. if you have 60% of the property in your name, then you have to pay stamp tax for the rest 40%.
What I can make out from the code is that you have to pay stamp tax on the portion of the property which is not in your name. For eg. if you have 60% of the property in your name, then you have to pay stamp tax for the rest 40%.
I would have to go back and reread it but I believe the transfer is only exempt if no significant considerations have changed hands. You said she would be paying you $400k and you are probably paying on this amount.
Is that correct?
Is that correct?