Trust Deed Forms

The forms of trust deed for privately owned community systems (illustrated in HUD Handbook 4075.12) must generally be used without modification.  Those HUD forms do not apply to systems owned and operated by an acceptable home owners' association.

Trust deeds will not be supplied as VA forms.

Acceptability of Trust Deed

The VA field station will accept the trust deed if

·   the trustee is a responsible firm

·   the description of the property in the trust deed is accurate and complete, and

·   the charges set forth and the trustee's fee (normally about 5 percent and in no event in excess of 10 percent of gross receipts) are reasonable. 

The trustee will preferably be a VA or HUD-approved lender, but may be any responsible, established firm (such as a title company) in the community.  In the latter case, there must be no identity-of-interest between the sponsoring group and the trustee.

Builder Costs Included in Valuation

If the builder recoups system installation costs via sale of lots and the VA value estimate is predicated on the inclusion of such cost in the value of the lots, the service rate must not permit the builder to realize the installation costs a second time.