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Secrets Of The Bare Trust Agreement

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The Bare Trust Agreement is a document that is made when a borrower mortgages a property for another party that is family-related.

This type of agreement allows the title to be transferred, in the future from the “family-related borrower”, back to the “intended borrower”. It also can avoid capital gains and land transfer taxes in future transfer transactions.

Legally it is performed as a title transfer refinance.

Please speak with your lawyer about the bare trust agreement. When purchasing a property for your loved one there is a chance that a bare agreement can be applied.

Things that must be considered for the intended borrower:

  1. The account should be joint that the mortgage is coming out of. The mortgage account should be set up jointly
  2. Bills and expenses for the house must be in the name of the intended borrower. Joint ownership is a good idea.
  3. The property tax bill should come out with the mortgage. If not, please put in both names as this will be also paid from the intended borrower’s account
  4. Never rent or claim rent on this property, as it would be seen as a gain and therefore incur capital gains.

This type of process applies to all borrower types. Also, there are some other items to consider when purchasing a property with your parents.

When you are purchasing a property in this type of situation, a consult with a lawyer and a Mortgage Broker/Agent is always best practice.

WikiMortgage

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