I was browsing my directory looking for articles that I had been collecting and came across this one on Land Trusts. I cannot tell you how many times a Land Trust has saved me while taking possession of a property. If you are a serious real estate investor, YOU MUST master this method of asset protection. You will get many benefits, both financial and legal.
The land trust is a very powerful tool for the savvy real estate investor. A land trust is a revocable living trust that is used specifically to maintain title to real estate. Each property is titled in a separate trust, providing maximum privacy and protection.
Are here seven reasons To use the land trust for real estate titling:
- Privacy – In today’s information age, anyone with an internet connection can search for your real estate property. Privacy is extremely important to most people who do not want others to know what they own. For example, if you own multiple properties within a city that has a strict code, you could end up being taken to court for too many, even minor, violations. Having your real estate titled in land trusts makes it difficult for city code enforcement to find who the owner is, as the trust agreement is not a public record for all to see.
- Protection against ties: Real property titled in the name of a trust is not subject to ties against the beneficiary of the trust. For example, if you are dealing with a seller in foreclosure, the judgment holder or the IRS may file a claim against the property on the seller’s behalf. If the property is titled in trust, the seller’s personal lawsuits or ties will not be attached to the property.
- Title Claim Protection – If you sign a security deed in your own name, you are subject to potential title claims against you if there is a problem with the property’s title. For example, a link submitted without your knowledge could result in liability against you, even if you purchased title insurance. A land trust in place as a seller will protect you personally against many types of title claims because the claim will be limited to the trust. If the trust has already sold the property, it has no assets and therefore limits its exposure to title claims.
- Daunting Litigation: Let’s face it, people tend to sue only others who appear to have money. Attorneys who work on contingency cases are likely to only accept cases that they can not only win, but also collect, as their fees are based on collection. If your properties are hard to find, you will appear “broke” and less worthy of being sued. Even if a potential plaintiff believes they have assets, the difficult prospect of finding and seizing these assets will discourage litigation against them.
- HOA Claim Protection – When you acquire title to a property from a homeowners association (HOA), you become personally liable for all fees owed. This means that if you buy a condo in your own name and the association assesses an amount owed, they can place a lien on the property and / or personally sue you for the obligation! Do not take title in your name in an HOA, but take title from a land trust so that the trust itself (and therefore the property) is the only recourse for homeowners association debts.
- Make contracts assignable: Ownership of a land trust (called “beneficial interest”) is assignable, similar to how shares of a corporation can be assigned. Once the property is a title in trust, the beneficiary of the trust can be changed without changing the title of the property. This can be very advantageous in the case of a real estate contract that is not transferable, such as a bank or HUD property. Instead of bidding on your own behalf, do so on behalf of a land trust, then assign your interest in the land trust to a third party.
- Make “assumable” loans: A non-assumable loan can be effectively assumed through the use of a land trust. The seller transfers the title to a land trust, with himself as the beneficiary. This transfer does not trigger the expiration clause of the mortgage. After the fact, you transfer your beneficial interest to you. This latest transaction triggers the sale maturity, but such transfer does not come to the lender’s attention because it is not recorded anywhere in the public records. This effectively makes a non-assumable loan “assumable.”
As you can see, there are many creative and effective uses for land trust, limited only by your imagination! William Bronchick, CEO of Legalwiz Publications, is a nationally recognized attorney, author, entrepreneur, and speaker. Mr. Bronchick has practiced law and real estate since 1990 www.legalwiz.com.
PS If you need a good South Florida Land Trust attorney, please contact Paul B. Woods, Attorney, (305) 559-9060, Mobile: (305) 803-1818, Email: [email protected]
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