Can you protect your home against possible liens and or foreclosure by placing it in a trust?

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Can you protect your home against possible liens and or foreclosure by placing it in a trust?

It will not be long before we are forced out of business due to the slow economic conditions. I (and wife) have just recently (last year) obtained a SBA loan in the amount of $175,000. The property and equipment value is well in excess of this amount. Is there any way that we can place our home (which is paid off) in some sort of trust, thereby preventing any liens being placed on it or worse yet, foreclosed on by the SBA or bank?

Asked on July 19, 2011 under Real Estate Law, Florida


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

Most likely placing your home into the name of a family trust will not protect its loss from a recorded mortgage upon it by a lending institution in the event your monthly payments do not remain current and the home falls into foreclosure.

However, if you place title to the home into a trust to protect against any obligations that you may be responsible for in the future, its placement into the trust may make it difficult for someone who you owe an obligation to who is not secured by a written trust deed recorded on the home to collect via the sale of the home.

Some States have "Homestead Exemption" statutes preventing the sale of one's residence to collect an obligation owed by a person up to a certain amount. Perhaps your State has such a law which could help clear up your concerns.

If the SBA loan is not secured by your home, the SBA cannot foreclose on your home. It can only sue you for an amount owed, obtain a judgment and try to collect upon it.

Perhaps consulting with a debt collection and trust lawyer would assist you futher regarding your questions.

Good luck.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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