Trust Acquisitions are still subject to. It’s just a sub category of sub2. Meaning the mortgage will stay in the sellers name. The trust takes ownership of the property, but the existing loan stays under the original borrowers liability. The trust agrees to make the payments on the loan, but the lender is not formally notified or required to approve the transfer because this is not a “SALE”. In a trust acquisition agreement, ownership is transferred to a trust, not directly to the buyer.
This benefits the seller by:
- Reducing Due-on-Sale Risk: Lenders are less likely to invoke the clause when the property moves into a trust.
- Perceived Security: The trust structure feels more formal and reliable for ensuring payments.
- Privacy: The trust conceals the new owners identity.
In contrast, a standard subject-to deal transfers ownership directly to the buyer, which may seem riskier and more likely to trigger lender scrutiny. However, in both cases, the seller remains liable for the mortgage.
Process for Trusts
- Xenia Group LLC will work with a Trust Attorney to place the house in a revocable living trust. The deed of the property is transferred in, but not the mortgage.
- The buyer will be assigned a majority of the beneficial interest in the trust. This is often 90-95%.
- Seller remains part owner. Around 5-10%.
- Buyer will continue to pay the mortgage for the property.