The guidelines you provided are relatively standard fare. I won’t go here into the ones you mentioned. I will give you five factors that a court used to identify a business purpose loan. Are they comprehensive? Certainly not. However, to use your terminology, these five factors should be considered “guardrails.”
The U.S. District Court for the Central District of California recently granted summary judgment for the defendant, Joel Sherman Levine (“Levine Trustee”), the trustee of the Joel Sherman Levine Revocable Trust (“Levine Trust”), in a case asserting violations of the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA). The court found that the loan to the Ross Trust was a business purpose loan.
Maxine Gilliam (“Ross Trustee”), the plaintiff, had approached a loan broker to procure a lender for a $150,000 loan to be secured by the property owned by the Lou Easter Ross Trust (“Ross Trust”), of which she was the successor trustee.
So, starting us off, we shall observe the war between the Ross Trust against the Levine Trust.