When and why do we need a trust deed for EB-5 funds? - EB5Investors.com

When and why do we need a trust deed for EB-5 funds?

We are looking at using EB-5 for a large mixed-use real estate development project. The EB-5 funds will be structured as a subordinated loan. Given the current trends, will this require a trust deed on the project? Why? Generally, when do we need a trust deed for EB-5 funds?

Answers

Blake Harrison

Blake Harrison

Immigration Attorneys
Answered on

The attorneys that assisted with your regional center formation and offering documents should be able to assist you with this matter.

Fredrick W Voigtmann

Fredrick W Voigtmann

Immigration Attorneys
Answered on

A trust deed is not necessarily needed to comply with the EB-5 immigration law/regulatory requirements, but it may be a requirement for a bank to participate in a senior loan so that it is protected and in first position. The EB-5 funding piece will be subordinated to that senior loan.

Charles Foster

Charles Foster

Immigration Attorneys
Answered on

Whether or not a deed of trust is required depends upon how the project is structured. Normally, a deed of trust is filed on a property in order to secure the debt of the investors and that could be a good thing, but it is not typically part of an EB-5 project. But in this case, given the fact that your EB-5 funds will be structured as a subordinate loan, having a deed of trust protects the investors. You must still make sure that the total investment, including the construction loan and the equity put into the project by the developers is an appropriate amount; together that typically would be anywhere from 60%-80% of the total project.

BoBi Ahn

BoBi Ahn

Immigration Attorneys
Answered on

USCIS does not allow EB-5 investment in a project to be structured as a loan. Since the funds must be "at risk", a guaranteed return of initial invested funds (ie., a loan) would not qualify.

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