The 3rd and final step is to create a triple net lease between the trustee acting as the landlord for the trust and Beneficiary 2.
This lease will give Beneficiary 2 the right to occupy the property or in some cases sub-lease the property to another party.
Under the terms of the lease Beneficiary 2 will be responsible for making a payment to the Trustee on a monthly basis in an amount that will cover any mortgage payments, any payments require to be sent to Beneficiary 1 for any equity that they have left in the property, property taxes, insurance and any Home Owners Association dues that might be attached to the property, and the Trustees monthly management fee. Additionally, they will also become liable for ALL of the maintenance and repairs costs associated with the trust property.
As part of the contractual agreement in the Triple Net Lease the Buyer / Tenant is require to keep 2 months total payments in the Trustees segregated trust account for the property.
Should Beneficiary 2 default on any of the required monthly payments the Trustee will immediately set in motion a "3 Day Notice To Pay Or Quit." This action will require Beneficiary 2, the tenant to pay the entire amount of rent due plus a late charge within a 3 day period.
Failure to make the payment after the 3 Day Notice To Pay Or Quit has been issued will cause the Trustee to file an "Unlawful Detainer" complaint with the county court where the property is located.
This process is designed to have Beneficiary 2, the tenant, in front of a judge in approximately 45 days in most cases. The judge will then issue an Eviction Notice that gives the defaulting party a set time period to vacate the property.
Since 1994 and hundreds of transactions later the Trustee has only had to issue 3 Unlawful Detainer actions.
REMEMBER, Beneficiary 2 / Tenant has not only placed 2 months of total payments with the Trustee, as reserves, they have also placed a good size down-payment into the trust to buy their Beneficial Interest in the trust.