Are Land Trusts A Loop Hole Around Due On Sale Clauses? Nope.
Ya’ll know me, I like to get straight to the point and answer the question. Those of you wishing for a little more detail can read the entire article for my mundane analysis as to the why. Warning: The “why” for this particular post is especially boring. Question: Does placing a property in a land trust prevent a lender from calling a loan due under the due on sale clause per Garn-St. Germain? Answer: No, the use of a land trust (as used by real estate investors) will not prevent a lender from calling a loan due when there is a change in title via a land trust. The key to this answer is the part where I said, “as used by real estate investors”. Investors like the idea of purchasing property “subject to” the loan due to the deal structure requiring little to no money down, no big down payment, no loan qualification, no financing costs, etc. I get it. The problem with this investment strategy is that once title is transferred without the loan being paid off ...