Land Trust Deed w/o trustee - Posted by Mark Warda

Posted by JohnBoy on March 17, 2001 at 23:55:22:

“”"“Someone asked what good is a trust if one must put the trustee’s name (his name) on the deed. Well, with most land trusts the same person is not the trustee and the beneficiary. You can’t expect to get all the legal benefits of a device if you cut corners. In fact one federal bankruptcy court said this setup voids the trust.”"""

I put MY name as the trustee, but NOT my name as the beneficiary. I put my LLC as the beneficiary making the trust owned by a seperate entity other than myself. I couldn’t see any benefit from naming yourself as the trustee of a trust that you are being named as the beneficiary personally.

Land Trust Deed w/o trustee - Posted by Mark Warda

Posted by Mark Warda on March 17, 2001 at 17:17:39:

A question which seems to keep coming up on this site is whether you can deed a property to a land trust without listing the trustee on the deed. The short answer is no.

A deed must have a grantee and a grantee must be a person (a natural person or a legal person such as a corporation). If a trust is just an agreement for a trustee to hold title, then the trust is not a person, it is an agreement. Thus the trust can’t hold title, only the trustee can, under the trust agreement.

One writer said his attorney told him the trustee must be a corporation and have a tax number and he was told that his attorney doesn’t understand trusts. But the attorney was half right. Under a land trust you don’t need a corporation or a tax number, but if your deed names only the trust but not the trustee, it can be legal only if the trust is a business trust. A business trust is a legal person like a corporation which can hold title but as a legal person it must have a tax number.

Someone asked what good is a trust if one must put the trustee’s name (his name) on the deed. Well, with most land trusts the same person is not the trustee and the beneficiary. You can’t expect to get all the legal benefits of a device if you cut corners. In fact one federal bankruptcy court said this setup voids the trust.

While some title companies may have insured deeds without the trustee’s name, this does not mean that they will hold up in court or that when you sell the property you will not have a problem getting title insurance. The trust might need to be recorded at that time to clear up the title. While a valid land trust never needs to be recorded, a defective one often must be.

As a matter of background I am an attorney who has handled land trusts in Florida for nearly 20 years and am the author of the book Land Trusts in Florida which will soon be in its 6th edition. I am currently working on a national land trust book but it probably won’t be published until next year.

If anyone would like to suggest specific matters to be discussed in the new book, or would like to share unique situations regarding land trusts in their state, I would welcome feedback. I answer all emails but I can’t guarantee an immediate answer.
Mark Warda
LTSC@warda.net
http://warda.net/LTSC.html

Re: Land Trust Deed w/o trustee - Posted by David Alexander

Posted by David Alexander on March 19, 2001 at 12:01:22:

Good to have you hear… Thanks for the input.

David Alexander

Mark, More Info, Please - Bronchick? Gatten? - Posted by TRandle

Posted by TRandle on March 18, 2001 at 23:11:22:

Mark,
I have some questions, please. I currently place title in the name of the land trust itself without mentioning the trustee. The title company I typically use is and has been a stickler for doing things the “right” way. I have been able to get title policies on these transactions.

“Under a land trust you don’t need a corporation or a tax number, but if your deed names only the trust but not the trustee, it can be legal only if the trust is a business trust.”

So, I can interpret this comment several ways. Are you saying the conveyance itself is illegal, the land trust is illegal, or is this perhaps a poor choice of words by an attorney?

“While some title companies may have insured deeds without the trustee’s name, this does not mean that they will hold up in court or that when you sell the property you will not have a problem getting title insurance. The trust might need to be recorded at that time to clear up the title. While a valid land trust never needs to be recorded, a defective one often must be.”

Does this comment mean the title insurance will be voided? I doubt this is true. The title company performed the underwriting, accepted the premium, and closed the transaction. Of course, the pursuit of the claim may or may not be worthwhile, but that is dependent on the situation. I’d hate to be in their shoes making that argument.

Who cares if the trust agreement needs to be recorded at the sale of the property? What downside is there to that? Granted, that’s not preferred, but what am I missing? I’m out of the deal, my original owners are out of the deal, and new parties are in place.

What possible reason could a title company provide for not insuring title? Even if one company had an issue with it, the idea that I couldn’t get title insurance is ridiculous in my (layman’s) opinion. Of course I could find a title company willing to insure the title, assuming there were no other issues. Please explain.

“You can’t expect to get all the legal benefits of a device if you cut corners.”

What “legal benefits” are we missing by invalidating the land trust? I’m not “cutting corners”; the omission of the trustee’s name is intentional. My main purpose in using a trust agreement is privacy in the public records. Using a land trust is not part of an elaborate asset protection scheme, ignoring the privacy advantage. I’d like to hear more.

Thanks in advance for all responses.