Commercial Loan Corporation is a California professional private money lender specializing in loans to trusts and estates when a child-beneficiary is receiving real property as his/her share of a distribution and wants to take advantage of Proposition 58 (avoid property tax reassessment). We are the company to call if you are hoping to keep your parent’s Proposition 13 tax rate and your attorney is recommending a 3rd party loan to your parents’ trust. We are a direct lender and can close your loan with our own funds. You can expect:
- An easy application process
- Flexible underwriting guidelines (No credit score minimums)
- Loans closed in 7 to 10 calendar days
Please complete the following form to have one of our representatives contact you regarding our Trust & Estate Mortgages, or call us at 877-464-1066 for immediate assistance.
Additional Trust & Estate Loan Information
What does Commercial Loan Corporation do?
We provide financing to illiquid trusts for the non-pro rata distributions of those trusts. Our borrowers are trusts that hold real property desired by one of the children-beneficiaries. These acquiring beneficiaries are hoping to keep the property tax rate (Proposition 13) paid by their parents. When there is a shortage of liquid assets to make an even distribution, the trust must borrow money to make an even distribution with the acquiring beneficiary taking the real property encumbered by our loan. This procedure is required so the acquiring beneficiary may obtain the parent to child transfer exclusion for reassessment of property taxes afforded by Proposition 58.
What is Proposition 58?
Proposition 58 became effective on November 6, 1986 and with certain limitations allows for the exclusion for reassessment of property taxes on transfers between parents and children.Proposition 193 provides some of the same exclusions as Proposition 58 for Grandparents and Grandchildren when all of the qualifying parents of the Grandchildren are deceased.
Why can’t the acquiring beneficiary lend the money to the trust when needed to make an even distribution?
The Board of Equalization (BOE) views this as a child buying out another child as opposed to a parent to child transfer. The exclusion for reassessment requires a transfer from parent to child.
Why can’t the acquiring beneficiary go to a conventional lender to get a loan?
The acquiring beneficiary does not own the property. The trust owns the property. Almost all conventional lenders are opposed to lending to trusts. They will typically ask the trustee to put the title in the name of the acquiring beneficiary before funding their loan. If this is done before the even distribution of the trust, the exclusion for reassessment will usually be denied.
Does Commercial Loan Corporation ask for a personal guarantee?
We do not ask for a personal guarantee any longer. It is our understanding that the BOE will view a personal guarantee by the acquiring beneficiary the same as the acquiring beneficiary putting in money to equalize the distribution of the trust. In other words, the BOE views it as a child buying out another child as opposed to a parent to child transfer.
Does Commercial Loan Corporation charge a prepayment penalty on their loans?
We do not charge any prepayment penalties. Many of our borrowers have the money necessary to buy out their sibling(s), but need to follow the procedure required to obtain exclusion for reassessment of the property taxes. We allow them to pay all or most of the balance off immediately to save money in interest charges. If they pay down the balance, we lower their payments to cover just the interest that accrues over a 30 day period. Some of our clients want to wait until the exclusion for reassessment is approved before paying the loan off completely.
What if the acquiring beneficiary does not have the money to pay off the loan to Commercial Loan Corporation?
Our loan terms are generally six (6) months. The acquiring beneficiary will need to get a conventional refinance to pay us off. We require a pre-approval letter from a known lender before funding our loan. If an acquiring beneficiary wants us to process his/her refinance, we are happy to provide this service.
Is it always smart to get a 3rd party loan?
It depends on the property tax savings versus the costs of getting a 3rd party loan. We provide a calculator on our website that will help estimate the property tax savings and the loan costs. The calculator will estimate how long one must hold onto the property to have the property tax savings cover all the loan costs. If the property is not going to be held long enough to cover the costs of the loan, it does not make financial sense to obtain a 3rd party loan.
Please look through our website; start the loan process here or call us at 877-464-1066.