This is an agreement 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 future from “family related borrower” back to the “intended borrower” and avoid capital gains and land transfer taxes. Legally it is performed as a title transfer refinance.
Please speak with your lawyer about this type of agreement. If you have purchased a property for your loved one then there is a chance that a bearer agreement would be applied to your situation.
Things that must be considered for the intended borrower:
- the account should be joint that the mortgage is coming out of. Even though you are not on title, the mortgage account should be set up joint
- the bills for the house must be in the name of the intended borrower. Even joint would be okay
- the property tax bill should come out with mortgage if not, please put in both names as this will be also paid from the intended borrower account
- never rent or claim rents on this property, as it would be seen as a gain and therefore incur capital gains.
Always talk to a Mortgage Agent. This type of process applies to all borrower types. When you are purchasing a property with this type of situation a consult with a lawyer is always best practice.
One response to “Secrets Of The Bearer Trust Agreement. Purchase.”
[…] There are a few differences on how the cosigner goes on title. You will want to review and be aware of your type of title ownership that has been approved for your cosigner. Sometimes the cosigner will end up purchasing the house if the original purchaser cannot go on title. Make sure you review this with your lawyer, and look at a Bearer Trust Agreement. […]