Ama-Kya Investments Inc., a Texas corporation (2001), uses the Equity Holding Trust™ ^{Patent Pending} system owned by North American Realty Service and Bill Gatten of California.

FAQ

 

A diamond is just a lump of coal that stuck with it; no matter how long it took, and no matter how great became the darkness or the pressure.

Malcolm Forbes

First a note of thanks

Being at this particular section on our website, tells me you have an interest in research and I must thank you very much for doing this, it is so vital when one is in the property arena. Thank you once again.

Please note, a full technical explanation in a question and answer format follows this short section.As a person selling or buying a home please go the section Sellers and for Buyers the section ‘Buyers’

I am often asked how long we had been using this system, particularly in view of the legislation past here in Texas in 2005 wherein Lease Option, Lease Purchase, Contract for Deed, Wraps and even Equity Share systems were made exceedingly difficult, if not impossible. The answer is, Our Equity Holding Trust system, used 20 years nationally and for eight years here in San Antonio

By its very nature I have to be quite general without having met you in person.

Ama-Kya? A strange name. It is derived from the Zulu language and it means “The House.” It is pronounced ama- KAH-ya, as in kayak.It is also spelt Ama-Khyia.

Sellers

Peace of mind. Over the years, I have come to realize that fear tends to paralyze most decision making processes. There are a number of ways to overcome fear; by far the most effective is knowledge. It is my intention, with following long dissertation, to create peace of mind for you.

Now maybe the time to rid yourself of the weighty of responsibility created by a property/house.

Many people wishing to sell their home are motivated by number of issues amongst which could be, the need for debt relief, to relocate, a recent divorce, avoidance of foreclosure, a short sale, simply the loss of an income or no equity available and/or lots of equity and the need to preserve this equity in a slow market.

Some examples

Recently, a lady who wished to move to a retirement home, but if she let in the house she felt that she would not be able to handle the ‘tenant and toilet’ issues, even with a management company in place.

The property at Royal Meadow is interesting case. An Army Veterinary surgeon had let his house, and the tenants were not paying. He had moved out of state. Ama-Kya took over the house and made the monthly payments.As he said to me, you have relieved an enormous area of frustration for me, besides which I did not lose a penny.

The property at Southern Sun, a young couple who owned the home had got themselves into financial difficulty and could no longer afford to stay in the house. There were some four months behind in payments. Ama-Kya took over the responsibility making all the monthly payments, on time, for the following year. There credit was repaired to some extent and they were able to acquire an affordable new home. I am particularly proud of this, as foreclosure did not damaged the couples credit beyond repair which in turn would have led to financial disaster for the rest of their lives. Not only were their lives positively impacted, but their children now have a better chance at succeeding, not being burdened by parental insurmountable financial debt.

Generally, I look to two types of sellers.

1.People who do not need their cash out of their home to move on.

2.People who have no equity in their home -- where the home is 100% financed.

On occasion, Ama-Kya, will make up payments once the owner has moved out and placed the house into their Equity Holding Trust.

I do recommend that I sit with your attorney or mine; with you present, to go through the documentation. I always recommend being at the meeting as I have become a specialist in my field much like a specialist surgeon whereas your attorney would be likened to a general practitioner. I do charge a small fee for my consulting. 

Disclaimer.I’m not an attorney an account or other recognized professional and do not purport to give legal, accounting or tax advice. See above recommendations.

Buyers

Remember throughout your adult life you remember highlights of your childhood; invariably these are centered around the neighborhood and home where you grew up. Now is your opportunity to create memories for your children.

No bank qualifying and only a small contribution to the trust moves you in. All we need to know is that you can afford the monthly payments, will be in a position to transfer the property into your name in a few years time.

Our extensive help with the qualifying process is made available to you, immediately. Amongst the documents and training you'll receive are, How to repair my credit effectively and quickly and the full NACA financial planning program. Both of these are free.

Disclaimer.I’m not an attorney an account or other recognized professional and do not purport to give legal, accounting or tax advice. See above recommendations.

THE LONG TECHNICAL PART OF THIS DISSERTATION

Q: How would a seller’s placing a home into a Title Holding Trust, and then creating an Equity Holding Trust™ (with respect to the seller’s applying for another home loan), be viewed by a new lender?

A:By holding a property in an Equity Holding Trust™, which property is leased to the co-beneficiary, the Settlor beneficiary will be seen by any lender as an "income property" owner (as if he/she were one of two partners in a rental property). However, the absence of the standard expenses of maintenance, management and vacancies, coupled with higher than normal rent, often times provides an excellent incentive for a much higher-than-normal "Income-to-Rental-Expense" consideration by the new lender 

Q: What happens when a co-beneficiary fails to make payments when due?

A:In the event of default, the party or entity acting as "landlord" would issue a 3-Day Notice to Pay or Quit, which notice would, if necessary, be followed by an Unlawful Detainer Action. 
By the defaulting party’s own agreement, the default itself (within itself) becomes constructive notice (to the non-defaulting beneficiary/ies) of the defaulting party’s intent to sell his/her beneficiary interest in the Trust to the non-defaulting parties at Fair Market Value as would have to be determined by an MAI Appraisal, following a substantial default fee and payment of all past-due payment. Should any sum more than is offered by the non-defaulting parties be proven, then that amount would be paid to the defaulting party in the form of an unsecured promissory note to be paid when the property eventually is sold t the natural termination of the trust. 

Q: Can a tenant or tenant beneficiary not pay the monthly rental payment or damage the property?

A:  In the event of ANY default, the tenant (usually also a beneficiary of the Trust) is evicted; loses their contingency fund; loses their home; gets reported to the IRS for a recapture of all tax deductions; gets sued for all missed and remaining lease payments. Good reasons NOT to damage the property. 

The vast majority of tenants do not trash apartments or houses.   The Ama-Kya Trust gives better odds than a straight rental does that missed payments and damage do not occur. 

Q: What if an Equity Holding Trust™ property was to lose value during the term of the agreement?

A:If, at the end of the Equity Holding Trust™ the property couldn't be sold (or purchased by the co-beneficiary) for enough to return the Settlor beneficiary’s initial contribution (e.g., his/her equity at start); and should the non-resident choose not to reduce its refundable contribution amount, then the co-beneficiary could choose to simply vacate the property with no further obligation. Alternatively…by mutual agreement…the parties could extend the contract. Note that, as is the case with any real estate purchase, down payment moneys, or costs of improvements can, in fact, be lost due to ordinary downward trends in real estate demand. 

Q: Can an Equity Holding Trust™ resident co-beneficiary (the Buyer) legitimately move from the trust property before the end of the agreement? 

A: Yes.Though all agreements that comprise the Equity Holding Trust™ must be honored, a co-beneficiary may lease or rent the property out, sell their interest, or even leave the property vacant, so long as the other beneficiaries concur, and their interests are not compromised or imperiled by such actions. 

Q: What happens if a beneficiary were to die during the term of an Equity Holding Trust™?

A: Beneficiary interest in the Equity Holding Trust™ passes to the heirs of a deceased beneficiary; which heirs then inherit precisely the same obligations, responsibilities, rights, and privileges as were held by the original beneficiary. Nothing changes. 

Q: How is the property's "mutually agreed value" determined at the inception of the Equity Holding Trust™, since there is no sale price per sé?

A:The "MAV" is set purely for the purpose of determining the Settlor beneficiary’s initial contribution at start (e.g., his or her "equity," along with any non-recurring closing costs paid). The MAV is generally the greater of – 1) the fair-market-value inferred by a professional Comparative Market Analysis, or 2) the value of the property reflected by a mutually acceptable value determination; or 3) the aggregate amount of the existing loan/s against the property (i.e., whichever is greater

Q: Why might a buyer choose an Equity Holding Trust™ purchase, even if loan on the property were to be greater than the property’s value?

A:The "over-encumbrance" on an Equity Holding Trust™ property is often perceived as simply a trade-off for a party’s inability to qualify for a mortgage loan, or lack of a standard down payment or preferred credit. In that the Equity Holding Trust™ purchase may avoid the handicap of self-employment, newness on the job, limited job history, or marginal credit history – one might choose to disregard the over-encumbrance. The fact is, that if by the end of the agreement, the resale value of the property had not increased sufficiently to cover the loan against it, then the resident may – 1) petition to extend the agreement, or 2) just move out and return the property to the original owner. If the aggregate monthly (after-tax) payment is in keeping with normal rent, and if the loan need not be paid-off at any particular time, an Equity Holding Trust™ buyer might find an over-encumbrance inconsequential. Here’s an example:

Q: Could a mortgage lender claim that the Equity Holding Trust™ violated its due-on-sale clause? 

A:Yes... although doing so would be contrary to the provisions of Federal Law (The Garn-St. Germain Act). No one can predict what a mortgage lender could [or might] "claim"; but, insomuch as none of the Equity Holding Trust™ documents are recorded (and needn't be), and since the Equity Holding Trust™ does not adversely affect the lender's security interest, such an assertion by a lender would be unlikely. The Garn-St. Germain Act (FDIRA 1982) provides that any homeowner may place its mortgaged property into a qualified revocable living trust, and lease the trust property to anyone he/she might choose… irrespective of what a lender's "druthers" might be. None-the-less, it is conceivable that a lender could declare the "intent" of the Equity Holding Trust™ to be contrary to their best interest, and assert that it was somehow a ruse to circumvent their ability to capitalize on the prevailing real estate market. 
In such a claim by a lender (institutional or private), the court would need to determine if any laws had been broken; as well as "how" and "if" the lender had been injured. Therefore, in actuality, the true (real) effect of the Equity Holding Trust™ is protection of the lender’s interests by its avoidance of: 1) alienation; 2) prohibited ownership transfer or title involvement; and 3) an unwise transfer of real property ownership under duress or threat of financial loss. The co-beneficiary (acquiring party) in an Equity Holding Trust™ does not receive real estate ownership; a bargain purchase option; or any loan of moneys. If, and/or when, the co-beneficiary would choose to acquire ownership of the property owned by the nominated trustee, such purchase would only be by ordinary means. Such purchase would be by a mortgage loan… or a petition for a bona fide Assignment and Assumption of the existing mortgage financing.

Q: In its 100+ years of use in the US, have Title-Holding Land Trusts ever been challenged by lenders claiming they were damaged by the unrecorded and private assignment of a Title Holding Land Trust's Co-Beneficiary interest? 

A: Yes, and all such challenges were adjudicated in favor of the beneficiaries. However, one must note that the Title-Holding Land Trust in most states (e.g., California or Texas) is not a "statutory" instrument: essentially meaning that there is no statute (law) or judicial history relative to it, and that no specific "Land Trust Act" per sé exists (yet). The title holding land trust in most states is, nonetheless, wholly operative and legal by virtue of its exclusion from specific prohibitions under the various states’ "Statute of [Land] Uses." 
Although we know of none in recent years, a few such actions have been brought in the past — and in each case, the decision of the court was in favor of the defendant (i.e., the lender lost).

Q: Since NARS (Ama-Kya is affiliated) has its own attorneys and accountants, should I consult with my own legal and accounting advisors regarding the feasibility of the Equity Holding Trust™ in my situation?

A: Yes. One should always seek out and heed the advice of his/her own legal and tax advisors, as well as seeking one’s own independent real estate agency advice. However, do note that chances of locating an attorney familiar with the various nuances of land trusts (not to mention the Equity Holding Trust) are remote at best. What will invariably happen is that an attorney not familiar with the Equity Holding Trust™ will strongly advise (if not insist upon) forgoing the myriad safety features and protections of the Equity Holding Trust in favor of something he or she better understands and can charge more for (Lease Option, Wraps, Contracts for Deed, etc. now mostly exceedingly difficult to do in Texas, North Carolina and increasingly, other states): precisely the very creative financing schemes, the dangers and risks of which, the Equity Holding Trust was designed to avoid. 
Though North American Realty Services, Inc. (NARS) and Ama-Kya Investments, Inc. do certainly welcome inquiries from any legal, accounting or real estate professionals, its accounting and legal staff may represent only its own best interests in a court of law due to standard Conflict of Interest regulations. 

If you feel you need more help or want to buy or sell a house fast contact Peter Michael at (210) 523 9990 or Amakya@aol.com

Q: Are most Attorneys and accountants familiar with the Equity Holding Trust™ or the workings of the "Title-holding Land Trust" in general?

A: No (not by any means). As a matter-of-fact, in most states where the title holding land trust is not statutory, were one to interview 100 attorneys, perhaps twenty-five or thirty might be familiar with, and closely accustomed to working with trusts in general; then of those, maybe only one might be reasonably well versed in the specifics and subtleties of "title-holding" land trusts: then out of a hundred of those, you might find one who has ever heard of the Equity Holding Trust. 

As mentioned in a preceding question, that which invariably happens is that an uninformed attorney will strongly advise (if not insist upon) forgoing the myriad safety features and protections of the Equity Holding Trust in favor of doing something he or she better understands, and for which they can charge more (Lease Option, Wraps, Contracts for Deed, etc. These are no longer viable in Texas due in my view to the correct legislation being enacted in 2005 PM): precisely the very creative financing schemes from which the Equity Holding Trust was designed to protect you.

Q: What would happen in the event of an irreconcilable dispute between the co-beneficiaries in an Equity Holding Trust™?

A: Such occurrences are rare due to the third-party neutral trustee aspect of the Equity Holding Trust™ arrangement, and due to the meticulous and comprehensive nature of NARS’ documentation. However, Equity Holding Trust™ beneficiaries do contractually agree in advance that such a disputes, should one ever occur, will be settled by the rules of binding arbitration, and that each party will abide by and rely upon the decision of an arbitrator associated with, and designated by, the American Arbitration Association. 

Q: What would stop a grantor, in his own revocable trust (a trust which is set up in his own name or with him as the only beneficiary), from revoking it, or changing his mind about terms, without the knowledge or consent of the other beneficiary/ies? 

A:Of prime importance is the fact that a Title-Holding Land Trust is directed by ALL of its beneficiaries unanimously (i.e., Power of Direction is mutual among beneficiaries). In other words, unless special provision are made in advance to the contrary, no single beneficiary or group of beneficiaries can direct the legal owner – the trustee – to do anything, sign anything, or approve anything involving the property’s title without the absolute concurrence and unanimous direction of [all] the others. As a result, a beneficiary cannot alter the trust agreement, borrow money on the trust property, or bring about a lien against it, without the full agreement and direction (or complicity) of the other beneficiary/ies. Likewise, a single co-beneficiary cannot add a room, install a swimming pool, or encumber the property or cloud the title in any manner without the full knowledge, consent, and direction of the other co-beneficiary/ies. 

Q: As a prospective seller, or buyer, interested in the Equity Holding Trust™ how and where do I begin?

A: First, contact Ama-Kya Investments, Inc. (210 523 9990 or go to the website Ama-Kya.com and complete of or the Seller Information Request forms). Ama-Kya will then answer your concerns and work closely with you throughout the transaction, from the initial meeting with all parties, to the close of Escrow. Ama-Kya can facilitate all phases of the transaction for you: consultation, document preparation; legal review, provision of the corporate trustee; provision of the Escrow/Title company and provision of the third-party payment collection and disbursement service. 

Q: What might be the standard costs for establishing an Equity Holding Trust™?

A: From 0.5% to 1.0% (half a percent to one-percent) of a property’s Mutually Agreed Value (MAV) at inception. Apart from any Realtor’s commission, typical aggregate closing costs for an Equity Holding Trust™ transaction, combining both the buyer’s and seller’s costs, can run upwards of two percent (2%) to three percent (3%) of the property’s MAV at inception. The fee for setting up the Trust itself, and Ama-Kya’s’ consultation fee (including facilitation and documentation) generally comprises only 1/4^th. 1/3^rd to ½, of the total closing costs. The remainder (beyond the consulting and set-up fee) includes, but may not be limited to the following: the escrow company fee (optional); title insurance or title search (optional but recommended); prorated and advance property taxes; hazard insurance premium; credit report (optional), home warranty insurance (optional), and termite inspection (optional). Though not a part of the Closing Costs per sé: one should take care to budget for the first payment due on the contract, and for perhaps at least one monthly payment to be held in a Contingency Fund (as a buffer for delayed payments).

Q: Is there a minimum or maximum allowable term for an Equity Holding Trust™?

A: Yes. It is reported in the literature that any land trust whose term is deemed a contrivance to avoid payment of income tax would (could) be challenged by the IRS and declared a "dry" or "failed" trust. For example, if the trust's term clearly conflicted with time requirements of certain tax deferment or exemption provisions (e.g., tax-deferred exchange), the trust could be characterized as a non-standard corporate entity or a security agreement. A failed trust could [might] conceivably — 

1. Deprive the co-beneficiary of mortgage interest and property tax deductions; and/or 

2. Create an untimely capital-gains tax event for the Settlor beneficiary. 

For these reasons only, it is recommended (though not mandatory) that two years be considered the minimum term for an Equity Holding Trust™ Regulations relative to Perpetuities would also compel a "land trust" term to be limited to no more than 20 years, or the length of the underlying financing on the trust property, whichever would be greater. If you feel you need more help or want to buy or sell a house fast contact Peter Michael at (210) 523 9990 or Amakya@aol.com

Q: While an Equity Holding Trust™ Co-beneficiary who is a resident in the trust property claims the "active" tax deduction for interest and property taxes, can a Settlor or investor beneficiary take the "passive" write-off for deprecation?

A:The tax regulations are not absolutely clear on this issue; however, there is nothing in the tax code that would preclude a non-resident beneficiary who was holding its interest for income-production purposes, from claiming the full Depreciation allowance. As a matter of fact, if not taken, the IRS would more than likely impose it at termination in order to adjust the property’s tax "basis" downward to create a wider taxable gain. 

Q: Can the Equity Holding Trust™ be utilized in buying or selling commercial property?

A: Yes. A Title-Holding Land Trust can hold commercial property. As a matter-of-fact, multiple beneficiaries can hold varying percentages of beneficiary interest…as little as 10% each in such a trust. Do note, however, that specific protection under the "Garn-St. Germain Act" extends only to residential property of fewer than five units. This means that transfer of a commercial property may need to be approved by the lender to void triggering a Due-on-Sale Clause remedy. 

Disclaimer.I’m not an attorney an account or other recognized professional and do not purport to give legal, accounting or tax advice. See above recommendations.