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Finance: What is a trust deed? 3 Views


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Description:

A trust deed lays out the rights and obligations of the bank underwriting the purchase of inventory/assets. That said, it won't catch you in a trust fall.

Language:
English Language

Transcript

00:00

Finance allah shmoop What is a trust deed here This

00:07

is okay So that's more of a trust fall A

00:10

trust deed is a kind of how to build it

00:14

kitt which instead of describing the construction of ah balsa

00:17

wood airplane describes how assets should be owned cared for

00:22

managed and eventually disposed of two the beneficiary or whoever

00:27

bought him in the first place or who were involved

00:29

in the model airplane build from the beginning What does

00:32

that mean Well a trustee lays out the rights and

00:35

obligations of the bank underwriting the purchase of whatever inventory

00:39

is involved here In this trust deed it lays out

00:43

the rights of the people transacting and it spells out

00:45

who gets called defend or when there is a conflict

00:48

And this is particularly useful in a world where there

00:51

is indeed not a lot of trust Essentially a business

00:54

owner is just holding merchandise that was bought by the

00:58

bank like eighteen miles of denim fabric with intentional rips

01:03

and tears in it You know those things as the

01:05

business owner stitches together hundreds than thousands of sets of

01:08

genes which they then sell into the fashion market places

01:13

In new york and milan the bank via their trust

01:17

deed owns that merchandise until the business owner essentially buys

01:21

them out of it or pays back the loan amount

01:24

committed when the merge was initially bought The trusty it'sjust

01:28

the legal documentation that outlines the various obligations of both

01:32

parties i'ii think of it as a contract light Why

01:35

would you want one of these arrangements If you're a

01:37

business owner Like why bother with all this trust deed

01:40

stuff and inventory and banks Well if you didn't have

01:43

tohave one well you wouldn't But if you're a fledgling

01:46

company hoping to make it big in the big city

01:49

and you need lots of inventory to make lots of

01:51

genes or nobody takes you seriously well then you do

01:54

what you have to dio and you can imagine that

01:56

banks charge very high interest for setting up the's trust

02:00

deeds because the credit risk they take here is usually

02:03

reasonably very high like the levi stitching company just vanishes

02:08

one night or was in fact a meth lab using

02:10

the denim as a mano a filtration process and the

02:14

mexican mafia comes in one night ending and this little

02:17

companies Entrepreneurial activities Well another reason banks charge high interest

02:20

is because the last thing they want tohave to dio

02:23

is repossess eighteen miles of denim and then try to

02:26

get their money back by selling that eighteen miles of

02:29

denim on ebay So as a result not only do

02:32

trusted borrowers pay high interest but they also have to

02:35

carry relatively expensive insurance on that inventory So that at

02:40

the end of the day the on the bank isn't

02:42

left high and dry Or at least you know just 00:02:44.81 --> [endTime] dry

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