Vesting a DSCR loan in a land trust - do lenders actually allow it?

Land-trust vesting is allowed by a portion of DSCR lenders, but it is not universal - so it is worth confirming before you are deep into underwriting. When it is allowed, the typical structure is exactly what your attorney described: title in the land trust, with your LLC as the beneficiary, and the LLC (or you personally) as guarantor on the loan.

Key points: (1) it generally does not change your rate - pricing is driven by FICO, LTV and DSCR, not the vesting wrapper; (2) the lender will want to review the trust agreement and will usually require the beneficiary/guarantor to sign; (3) on due-on-sale - financing into the trust at closing is clean, and transfers into a land trust where you remain the beneficiary are protected under the Garn-St. Germain Act for 1-4 unit properties. We have lenders that do land-trust vesting routinely. Send me the trust structure and I will confirm fit before you order anything - (818) 447-7035.

I hold three properties in Illinois land trusts with LLC beneficiaries. Two of my four lenders were totally fine with it, the other two would not do it and wanted the LLC directly on title. So definitely confirm with your specific lender first - it is very lender-by-lender.