Friendly Liens
Protect Your Assets with Friendly Liens
Friendly liens are a smart and effective way to safeguard the equity in your real estate or business assets. We can help you secure your property through mortgages or deeds of trust, and protect business assets with UCC-1 filings.
Why Equity Stripping Matters
Creditors often check your assets to see how much equity is available. If they find real estate or business assets with significant equity, those can become easy targets. Equipment, inventory, or property with high value may tempt creditors to pursue legal action.
A well-structured equity stripping plan makes your assets appear fully encumbered—discouraging creditors from pursuing them. Instead of seeing valuable equity, they’ll move on to other opportunities.
The Right Way to Strip Equity
Many online equity stripping programs don’t hold up under scrutiny. Often, they involve unknown third parties holding liens on your property—which can backfire in court.
For a lien to work, it must have a legitimate business purpose. If you can explain to a judge why the lien exists and how it makes financial sense, you’re in a strong position. Unfortunately, many people don’t understand their own liens—or why they exist—leaving them vulnerable.
Our approach is different.
We use capitalization notes, ensuring your liens are structured logically. As long as you make payments (even to an entity you control), your protection remains intact.
Tax Benefits
Since the lien-holding entity is owned by you (or passes through to you tax-wise), there are no tax complications. Payments you make are deductible on one side and counted as income on the other—keeping everything balanced.
Choosing the Right Entity
We typically form a new entity to hold the lien, ideally in a state that:
- Doesn’t publicly list owners/managers
- Allows flexible naming (preferably something lending-related)
- Provides privacy, making it harder for creditors to trace
Making It Work Long-Term
For an equity-stripping lien to hold up in court, you must follow through. Regular payments—even if they’re to your own entity—are essential. If you don’t treat the structure seriously, a judge won’t either.
When used correctly, this strategy has proven to be a powerful asset protection tool for our clients.
What You’ll Need
To set up a friendly lien, we’ll:
- Form an entity funded by your capitalization note.
- Secure the note with liens (mortgage, deed of trust, or UCC-1 filing).
- Prepare all necessary documents—security agreements, operating agreements, certificates, and more.
You’ll need to provide:
- Copies of property deeds
- A list of business assets (for UCC-1 filings)
Once everything is in place, you can rest easy knowing your assets are protected.
FOR MORE INFORMATION PLEASE CONTACT
ASSET PROTECTION, INC.