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Modern Creative Financing & The NARS PACTrust™ (Equity Holding Trust)

 Palm Springs Desert Area Homes, Condos & Real Estate 

Legitimizing Creative Financing

There is only one safe, simple, and practical solution to all the problems of creative financing that at the same time retains all its advantages and more. This is the NARS PACTrust™.

What is the NARS PACTrust™? 

The NARS PACTrust™ is a versatile title-holding device pioneered and offered by North American Realty Services of California. It is based on the Illinois-type Land Trust. It is used in California and all over the United States. It is a form of Living Trust, which is well known as an estate-planning tool. Specifically, it is a "Grantor's Fully Funded Inter Vivos Family Trust." It is beneficiary directed rather than trustee directed.

North American Realty Services are at:

How the NARS PACTrust™ Works

The property owner deeds his/her legal and equitable title in the property to a third party trustee (PAC Holdings, a non-profit California Corporation). The property owner retains control over the property as beneficiary of the trust. 

Depending upon the goals of the original property owner, an additional beneficiary is brought into the trust. This additional beneficiary occupies the property under a lease agreement with the trustee. A neutral third party manages collections under the lease and handles all disbursements, such as payments to the lender, property taxes and payments to the property owner. 

The trust may be established for any period, typically from 3 to 20 years. Upon termination of the trust, the additional beneficiary becomes the owner of the property at or above a mutually agreed value, just as if it was a "buyer" of the property under one of the creative financing scenarios described at the "Creative Financing" link at left. 

Here is an outline of how the versatile PACTrust™ is used to accommodate the more common "creative" transactions:

As an AITD (Wrap-Around): A seller places its property into a NARS PACTrust™, assigning a full beneficiary interest to the "buyer," with the agreement that the property will be leased to the co-beneficiary on a triple-net basis (that is, the resident pays all expenses) for a specified period of time. The property is then scheduled to be sold at the end of the Agreement. Upon sale there is a distribution of proceeds to (between) parties with respect to each of their proportionate shares of beneficiary interest. 

As a Land Contract: (Contract for Deed): Same as above.

As a Lease Option: The property is placed into a NARS PACTrust™ with the understanding that, at the end of the Agreement, the property will be sold to the resident co-beneficiary for fair market value, minus any and all sums owed to the resident co-beneficiary. The resident co-beneficiary essentially has first right of refusal to purchase the property at termination of the Trust..

As a Lease Purchase: Same as above, except that the Agreement provides that the property will be acquired by the resident beneficiary at termination irrespective of market conditions, relative values, etc. In this scenario the co-beneficiary has the obligation to either sell or refinance at termination of the Trust.

The NARS PACTrust™ Shield

• Avoids passing property's title to the buyer until the property is actually sold.

• Avoids compromise of the Due-on-Sale clause.

• Shields the property against creditor and tax liens.

• Shields the property from the legal problems of seller or buyer.

• Protects the property from the untoward act of either/any beneficiary or entity.

• Protects the property from probate and federal estate taxes.

• When the beneficiary interest is held by parties in limited partnerships or LLC, the entire transaction is a virtually bullet-proof shield against judgment creditors, including the courts, bankruptcy and the IRS.

• Creates privacy of ownership.

For further information on the NARS PACTrust™, call or email Tony Brunner of Brunner & Associates or direct your questions to Bill Gatten of North American Realty Services at 818-831-3312. Tony Brunner is affiliated  with North American Realty Services. Go to the Index of Reports to find more on the NARS PACTrust™. Visit the NARS PACTrust™ web site at http://www.landtrust.net.

E-Mail Tony

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This Is Coachella Valley's Unique Real Estate Web Site

Palm Springs Desert Area Homes, Condos & Real Estate are to be found in the Coachella Valley cities of Palm Springs, Palm Desert, Cathedral City, Rancho Mirage, Indian Wells, Bermuda Dunes, La Quinta, Desert Hot Springs, Thousand Palms and Indio. These are the cities that form the Greater Palm Springs Desert Area and are home to some of the finest living and the best resort real estate in the world. If you want to sell or buy homes, condos, or real estate anywhere in the Coachella Valley,  this site will provide the little known information you need and the solutions you seek. 

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