Fractionalized Trust Deed Sample
28. Jun, 2009 
4 Comments
Fractionalized trust deed is the new buzz word in real estate investing! I learned this strategy as a way to use money from more than one private lender to fund one residential investment deal and have them both be in the same lien position.
Over the years, my private lenders always had what I referred to as “remnant money.” Meaning, I had put most of their money to work on a one-to-one basis but often they had an extra $25,000 or so laying around that wasn’t enough to fund one whole residential (1-4 unit) deal.
Whenever I mentioned the subject of putting two lenders together, the issue that always came up was “who’s going to be in first position?” or more like “I’m not going to be in 2nd position!”
Well, I mentioned this to a friend of mine in California and he mentioned the fractionalized trust deed. This trust deed allows up to 10 lenders all with individual promissory notes to be in 1st lien position on one residential deal. Here’s a sample…
Now, this is provided as a sample only! I’m not an attorney and you’ll need to check with your own real estate attorney and the SEC to see what the rules are about using it in your state but it’s a pretty cool concept and really simple to do.
What a great webinar! Thanks for all the great information.
Thank you for the free information and forms. I just learned a few new things. Great info!
How does this differ from a partitioned note?
I’m not familiar with the term, Hak.