Can you protect your home against possible liens and or foreclosure by placing it in a trust?

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Can you protect your home against possible liens and or foreclosure by placing it in a trust?

It will not be long before we are forced out of business due to the slow economic conditions. I (and wife) have just recently (last year) obtained a SBA loan in the amount of $175,000. The property and equipment value is well in excess of this amount. Is there any way that we can place our home (which is paid off) in some sort of trust, thereby preventing any liens being placed on it or worse yet, foreclosed on by the SBA or bank?

Asked on July 19, 2011 under Real Estate Law, Florida

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Most likely placing your home into the name of a family trust will not protect its loss from a recorded mortgage upon it by a lending institution in the event your monthly payments do not remain current and the home falls into foreclosure.

However, if you place title to the home into a trust to protect against any obligations that you may be responsible for in the future, its placement into the trust may make it difficult for someone who you owe an obligation to who is not secured by a written trust deed recorded on the home to collect via the sale of the home.

Some States have "Homestead Exemption" statutes preventing the sale of one's residence to collect an obligation owed by a person up to a certain amount. Perhaps your State has such a law which could help clear up your concerns.

If the SBA loan is not secured by your home, the SBA cannot foreclose on your home. It can only sue you for an amount owed, obtain a judgment and try to collect upon it.

Perhaps consulting with a debt collection and trust lawyer would assist you futher regarding your questions.

Good luck.


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