[WSBAPT] planning for investors with financed rentals

[Nicholas Pleasants]

Generally, a transfer into an inter vivos trust in which the borrower remains a beneficiary does not trigger the due on sale clause due to federal preemption. See Garn-St German Depository Institutions Act, 12 USC 1701j-3(d)(8) (https://www.law.cornell.edu/uscode/text/12/1701j-3). I do not see anything requiring this to be an owner-occupied dwelling for the exemption to apply.

Best,
Nick

Nicholas Pleasants
James Pleasants, P.C.
2300 130th Ave NE, Suite A-101
Bellevue, WA 98005-1755
(425) 615-7070 tel.
(425) 497-0799 fax
nick at pleasantslaw.com
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-----Original Message-----
From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Doug Owens
Sent: Tuesday, May 07, 2019 8:22 AM
To: wsbapt at lists.wsbarppt.com
Subject: [WSBAPT] planning for investors with financed rentals

Dear Listmates, I have a married couple who are clients in their forties with small children and a community property agreement, and who own several residential rentals that are financed.  They want to provide that on the death of the first to die, the property they have accumulated will be preserved for the benefit of the children of their marriage and not be available to the product of a subsequent union of the surviving spouse.  With the CP agreement I do not see how this can be done unless they convey the property into a trust while both are still living, but I am concerned about the due on sale clauses in the deeds of trust on the rentals.  Does anyone have any experience with this type of plan?  Thank you.  Yours truly, Doug Owens

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