What is a Package Trust Deed in Real Estate Lending?

I've noticed many property buyers get confused about different types of real estate security instruments. Package Trust Deeds offer a unique solution that combines both real estate and personal property under one security document. Let me break this down for you in simple terms.

Package Trust Deed: A Package Trust Deed is a legal document that secures a loan using both real estate property and personal items as collateral. The personal items typically include fixtures, appliances, or furniture that are part of the property transaction.

The Components of a Package Trust Deed

Package Trust Deeds cover two main categories of property. First, there's the real property portion, which includes:

• The actual land being secured

• Any buildings or structures on the property

• Fixed improvements like driveways, fencing, or landscaping

Then we have the personal property elements:

• Built-in appliances like dishwashers and ovens

• Attached fixtures such as lighting or ceiling fans

• Select furniture pieces included in the sale

• Other items specified in the agreement

How Package Trust Deeds Work

The structure of a Package Trust Deed creates a three-party arrangement. The lender provides the loan, the borrower pledges both real and personal property as security, and a trustee holds legal title until the loan is paid off.

Each party has specific roles:

• Lenders receive comprehensive security for their loan

• Borrowers maintain possession and use of all property while making payments

• Trustees act as neutral third parties, holding title until loan completion

Benefits and Considerations

For lenders, Package Trust Deeds provide extra security through:

• Complete coverage of both property types

• Streamlined documentation processes

• Clear rights to all secured items

Borrowers can benefit from:

• Single document coverage for multiple assets

• Simplified loan processing

• Possible improvements in loan terms

Common Applications

I see Package Trust Deeds used most often in:

• Commercial properties with significant built-in equipment

• Rental properties sold with furnishings

• Special use properties like restaurants or hotels

• Mixed-use buildings with various asset types

Legal Aspects and Requirements

Each state has its own rules about Package Trust Deeds. You'll need to consider:

• Local recording requirements

• State-specific enforcement rules

• Default procedures

• Foreclosure regulations

Package Trust Deeds vs. Traditional Trust Deeds

The main difference lies in scope. Traditional Trust Deeds only cover real property, while Package Trust Deeds include both real and personal property. This can affect:

• Documentation requirements

• Filing fees

• Enforcement procedures

Common Misconceptions

Let me clear up some confusion:

• You still own your property - the trustee just holds legal title

• Not all personal property must be included

• The foreclosure process follows real property rules

Tips for Working with Package Trust Deeds

I recommend:

• Creating detailed property inventories

• Keeping thorough records

• Working with qualified professionals

Making Informed Decisions

Package Trust Deeds can be valuable tools for securing loans with mixed property types. They simplify documentation and provide clear security rights for all parties involved.

Ready to explore your real estate financing options? Contact Bellhaven Real Estate for expert guidance on Package Trust Deeds and other property matters.