Orange County All Inclusive Trust Deeds (AITDs)
What is an AITD? An All Inclusive Trust Deed is basically when the buyer takes over the seller’s existing loan. And NO, it doesn’t have to be an ‘assumable loan’ … The current lender is actually not even notified!
Who Are Good Candidates for AITDs?
As a buyer, you could use AITD as an avenue if you cannot qualify for a traditional loan. If you’re a seller, it’s an option if you don’t want to short sale, or if you have a fabulous loan that you would like to transfer to a family member. Another time an AITD could save the day is if you are a seller and your HOA is in litigation, or there is some type of situation causing purchase loans in your community to get denied.
How do AITD Transactions Work?
With an AITD, most aspects are the same as a normal Orange County real estate transaction. Instead of a traditional lender involved, the escrow company draws up the paperwork and usually collects the payments as ‘the manager’, which they then send over to the existing lender on buyer & seller’s behalf.
AITD allows you to make your own qualification rules, which is pretty neat! You don’t necessarily have to worry about credit history, scores, or capital gains taxes (if it’s not your primary residence) should you go this route.
If you’re thinking of doing an AITD, make sure to record the grant deed as well. It’s better for everyone. Especially if you are the buyer, because then you can technically write off the mortgage interest.
A great company to use for this process locally in OC is Mission Country Escrow. Katie the owner spoke to us about it today, and they have been doing AITD’s in Orange County for 30 years. If you’re thinking of doing one, definitely reach out to them.
Questions To Ask When Doing an AITD
- Loan amount: is it a ‘mirror image’ of the seller’s current loan, or if not, what interest rate will be charged?
- Down payment: is the buyer putting funds down, and if so, how much?
- Length: what is the length of the AITD and are there any extension options?
- HOA: does the property have a Homeowner’s Association?
- Commissions & closing costs: is the typical ‘each to pay own’ presiding, or who is paying?
- Loans: how many does the seller currently have, and are they all current?
All Inclusive Trust Deed Risks
Of course, there are plenty of risks too. Technically, the lender could call the loan due & payable because the owner transferred. However, the chances of that happening (unless there’s a late payment) are very slim.
Furthermore, we had Steve Fink, real estate attorney discuss advantages & disadvantages of AITD. Honestly, there are a ton of risks involved, and these AITD transactions should be done only in very special cases and with extreme caution. Always use a professional, and get your facts!
If you’d like a personal introduction or have questions about AITD’s, just call Angie at 949-338-7408, tweet @AngieWeeks, or fill out the form below – we’ll be sure to connect you with trusted professionals to protect your interest!
Orange County Real Estate Success 