Final answer:
The Garn-St. Germain Act allows contractors to transfer interest in residential property into a trust without triggering a loan's due-on-sale clause, and also deregulates the banking industry to encourage lending.
Step-by-step explanation:
The Garn-St. Germain Act is primarily used by contractors or lenders in the context of real estate transactions. This legislation, passed in 1982, has various provisions, but what specifically benefits contractors is its protection against loan 'due-on-sale' clauses when transferring an interest in residential property. For instance, suppose a contractor takes out a loan secured by a mortgage on residential property and later decides to place that property into a trust for estate planning purposes. In that scenario, the Garn-St. Germain Act allows for this transfer without triggering the loan's due-on-sale clause, which typically requires the full repayment of the loan upon transfer of ownership. Additionally, the act deregulates the banking industry to stimulate lending and remove certain restrictions on financial institutions.
Overall, the Garn-St. Germain Act can be valuable for contractors as they navigate property transfers and financing arrangements. It ensures that particular kinds of real estate transfers do not inadvertently cause financial difficulties due to the acceleration of loan repayment requirements.