Reasons to Use the PACTrust

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Sellers Select Realty Services

23225 Tamyram Rd

Sky Valley, CA 92241

Tel: 760-329-3650

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15 Reasons to Use the NARS PACTrust™ (Equity Holding Trust)

Palm Springs Desert Area Homes, Condos & Real Estate

1. Protection from the "Due-on-Sale" clause: It is a legitimate "take-over" of an existing loan’s payments without loan assumption or violation of the Due-on-Sale Clause. The Garn-St. Germain Law (FDIRA 1982) specifically protects the transaction.

2. A better selling price: This is for the same reason as "standard" creative financing. The seller is offering better terms plus other benefits. See below for the other benefits to the buyer.

3. Fast sale and short escrow.

4. Avoidance of IRS tax on "debt relief:" A distressed seller need not destroy his or her credit by resorting to a "short sale" or walking away from the property.

5. Freedom from loan payments and other expenses: The resident beneficiary (generally) pays all these.

6. (For the "tired" landlord) Enhanced income and profit potential: (compared to renting or leasing): elimination of negative cash flow, management costs, maintenance and vacancies. Gross rental income can be enhanced because the resident beneficiary qualifies for the income tax deduction.

7. Protection from the injurious actions of the "other party:" This includes non-payment, non-repair, or property damage by the resident beneficiary.

8. Ease of collection and management: Collection of the resident’s payments; disbursement to creditors; late notices; and any necessary admonitions, evictions or other legal processes are handled by a third party. Where possible, a reserve fund is established in order to cover any delays or default of payment by the resident co-beneficiary.

9. Ease of eviction: In case of default by the resident beneficiary, eviction is by simple Unlawful Detainer action (as if dealing with an ordinary rental property). There is none of the anguish, time and expense involved with judicial foreclosure, trustee sale, ejectment, or quiet title actions to gain possession following a buyer’s default. From the inception of the trust all parties agree that any uncured default will result in a) eviction, b) revocation of the trust, and c) return of the property by the trustee to the original owner,

10. Participation in profit potential upon future sale: A NARS PACTrust™ seller (depending upon initial relative negotiating positions) could opt to retain, along with any beginning equity) a percentage of the property’s future profit potential.

11. Protection of seller’s title: Title transfer and title involvement is minimal. A third party trustee under the direction of the seller holds title. The resident beneficiary (buyer) comes nowhere near the title until ultimate purchase upon termination of the trust.

12. Income tax deferment: Because the NARS PACTrust™ constitutes divestiture of personal property rather than real estate, the parties settle on a "Mutually Agreed Value" at inception. A sales price is not established until the actual sale of the property upon termination of the trust. For this reason, income tax that would otherwise be due on transfer of title and possession can be deferred until the termination of the trust. In addition, upon termination of the trust, the seller’s interest in the trust is eligible under the IRS guidelines for a "Like Kind Tax Deferred (1031) Exchange."

13. Anonymity: The original owner’s conveyance of title to the third party trustee is a matter of public record. However, this is normal because property owners place their property in trusts all the time for estate planning purposes. However, the trust itself and related documents are never placed in the public record. The trustee is exempt from any requirement to reveal information about the trust or the identity of its beneficiaries to anyone.

14. Current property taxes can remain unchanged: Because the NARS PACTrust™ is a living trust per se, transfer of title to the trust does not constitute a taxable sale or divestiture of property. So the current property tax assessment remains unaltered.

15. It is an excellent marketing tool for the Seller because of these benefits to the Buyer:

Easier credit qualification and payment arrangements, since these are at the discretion of the seller not a bank.

Low, minimal or no down payment at the discretion of the seller not a bank.

The resident beneficiary (buyer) can claim mortgage interest and property tax as income tax deductions. Irrespective of the trust arrangement, the property is a "qualified residence - See IRC 163(h)(4)(D).
Equity build-up as the seller’s mortgage principal is reduced.
Share in appreciation of the property.
Protection (shielding) of the property’s title from creditor judgments, tax liens, lawsuits, bankruptcy, marital dispute or illicit acts of either party (resident or non-resident beneficiary).
Pride-of-ownership without the rules and constraints of the conventional real estate qualification, mortgage and acquisition process. The resident co-beneficiary is "a homeowner that hasn't closed yet." This means the property will be well maintained.
Ownership of the beneficial interest need not impact the resident beneficiary’s financial statement. This is a real plus when applying for credit.

In sum, the NARS PACTrust™ is an effective legal shield for virtually any creative financing objective. It can meet the objectives and functions of any of these arrangements without the many risks associated with them.

Home Page

Sellers Select Realty Services

23225 Tamyram Rd

Sky Valley

CA 92241

Tel: 760-329-3650

Fax:760-329-1265

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Contact Us

15 Reasons to Use the NARS PACTrust™ (Equity Holding Trust)

Palm Springs Desert Area Homes, Condos & Real Estate

1. Protection from the "Due-on-Sale" clause: It is a legitimate "take-over" of an existing loan’s payments without loan assumption or violation of the Due-on-Sale Clause. The Garn-St. Germain Law (FDIRA 1982) specifically protects the transaction.

2. A better selling price: This is for the same reason as "standard" creative financing. The seller is offering better terms plus other benefits. See below for the other benefits to the buyer.

3. Fast sale and short escrow.

4. Avoidance of IRS tax on "debt relief:" A distressed seller need not destroy his or her credit by resorting to a "short sale" or walking away from the property.

5. Freedom from loan payments and other expenses: The resident beneficiary (generally) pays all these.

6. (For the "tired" landlord) Enhanced income and profit potential: (compared to renting or leasing): elimination of negative cash flow, management costs, maintenance and vacancies. Gross rental income can be enhanced because the resident beneficiary qualifies for the income tax deduction.

7. Protection from the injurious actions of the "other party:" This includes non-payment, non-repair, or property damage by the resident beneficiary.

10. Participation in profit potential upon future sale: A NARS PACTrust™ seller (depending upon initial relative negotiating positions) could opt to retain, along with any beginning equity) a percentage of the property’s future profit potential.

11. Protection of seller’s title: Title transfer and title involvement is minimal. A third party trustee under the direction of the seller holds title. The resident beneficiary (buyer) comes nowhere near the title until ultimate purchase upon termination of the trust.

14. Current property taxes can remain unchanged: Because the NARS PACTrust™ is a living trust per se, transfer of title to the trust does not constitute a taxable sale or divestiture of property. So the current property tax assessment remains unaltered.

15. It is an excellent marketing tool for the Seller because of these benefits to the Buyer:

Easier credit qualification and payment arrangements, since these are at the discretion of the seller not a bank.

Low, minimal or no down payment at the discretion of the seller not a bank.

The resident beneficiary (buyer) can claim mortgage interest and property tax as income tax deductions. Irrespective of the trust arrangement, the property is a "qualified residence - See IRC 163(h)(4)(D).

Equity build-up as the seller’s mortgage principal is reduced.

Share in appreciation of the property.

Protection (shielding) of the property’s title from creditor judgments, tax liens, lawsuits, bankruptcy, marital dispute or illicit acts of either party (resident or non-resident beneficiary).

Pride-of-ownership without the rules and constraints of the conventional real estate qualification, mortgage and acquisition process. The resident co-beneficiary is "a homeowner that hasn't closed yet." This means the property will be well maintained.

Ownership of the beneficial interest need not impact the resident beneficiary’s financial statement. This is a real plus when applying for credit.

In sum, the NARS PACTrust™ is an effective legal shield for virtually any creative financing objective. It can meet the objectives and functions of any of these arrangements without the many risks associated with them.

This Is Coachella Valley's Unique Real Estate Web Site

Palm Springs Desert Area Homes & Condos - Creative Real Estate for Sellers and Buyers