What Is an All-Inclusive Trust Deed (AITD)?

An All-Inclusive Trust Deed (AITD) secures a wrap-around loan that incorporates an existing loan with new seller financing. For example: on a $200,000 sale with a $150,000 existing first trust deed at 7% and a $20,000 buyer down payment, an AITD is created for $180,000 at 8%. The AITD wraps around the existing $150,000 loan — the seller earns 1% on the wrapped $150,000 plus 8% on the $30,000 of new money, effectively increasing yield.

The buyer makes payments based on the full AITD balance ($180,000), and the seller continues making payments on the existing underlying loan. All terms — rates, maturity date, payment amount, late charges, and prepayment penalties — are completely negotiable between the parties.

AITD vs. Land Contract: An AITD is usually recorded with a grant deed and conveys full title to the buyer, while a land contract may be unrecorded and conveys only equitable interest. Foreclosure under an AITD goes through the trustee (non-judicial), while a land contract may require judicial foreclosure. With an AITD, future liens against the seller will not attach to the property; with a land contract, they may. AITDs always include underlying loans for a larger seller yield, while land contracts may be either all-inclusive or split interest.

Critical warning: if the existing first trust deed contains a 'Due on Sale Clause,' the lender may accelerate the loan upon discovering the transfer. Both parties should seek legal and tax counsel regarding the ramifications before proceeding with an AITD. Team Goeglein at Fidelity National Title advises agents on the title implications of seller-financed transactions across the South Bay.