Posted by dew on May 27, 2000 at 22:31:05:
How do you set them up via fax. Direct to Secty. of State or do you have someone else set it up for you?
Thanks for the info. dewCO
Land Trust – Lawyers say not recognized in my state (MD) - Posted by Ron (MD)
Posted by Ron (MD) on May 23, 2000 at 14:33:23:
I’ve talked with 3 attorneys about using land trusts for my rehabs (and, actually, for my residence).
All three discouraged them. One knew virtually nothing about them (in fact, he thought the were similar to land contracts). One has used them with a few investors, but he has them sign a disclaimer acknowledging that they may not be valid.
All three attorneys thought that an LLC was a better alternative. I thought the land trust offered a few distinct advantages over an LLC, namely:
– Privacy (the beneficiary is not in the public record)
– Cost (a land trust is essentially free – I can fill out the form)
– Not a taxable entity (no separate tax filing needed)
– Because of the neglible cost of the trust, each property goes into a separate trust.
Three questions:
– Do I understand the advantages of a land trust?
– Should I insist on putting my properties into trusts, despite the discouragement from the attorneys?
– Does a land trust do anything to limit my liability (like an LLC does)?
Thanks in advance.
Ron
Re: Land Trust – Lawyers say not recognized in my state (MD) - Posted by SCook85
Posted by SCook85 on May 24, 2000 at 11:58:51:
Ron,
I went through the same thing with every attorney I discussed the issue with. We probably discussed it with some of the same ones, but the response was always the same.
This is the conclusion that I have come to. Land Trusts are not beneficial to you and I for what we do- Rehabs and reselling. We are still open to liability by utilizing them. LLC’s give us all the protection that we seek, and a degree of privacy if we use seperate LLC’s for each property. I frequently set up LLC’s- via fax and expecited service it only costs me $80 per LLC. I feel it is well worth the expense.
The only advantage I see to using a land trust in MD is to hide from the due on sale clause- this is irrelevant to you and I (I don’t think you do “subject to’s”), outside of that LLC’s are better.
I hope this helps.
Steve Cook
Re: Land Trust – Lawyers say not recognized in my state (MD) - Posted by phil fernandez
Posted by phil fernandez on May 23, 2000 at 19:21:15:
Ron,
I put all of my long term rental properties in their own individual LLC’s. I try to create seperation. If one gets sued, the others are insulated.
Although not an attorney, I agree with Bronchick that a land trust will not limit liabilty in a suit, but will make it very hard for an attorney to find the beneficiary of the trust mainly due to the fact that the land trust agreement is not recorded.
They miss the point . . . - Posted by William Bronchick
Posted by William Bronchick on May 23, 2000 at 16:21:10:
Whether or not land trusts are valid is a discussion you will have in court, which is a moot point if that happens. Land trusts are not for liability protection but for pirvacy, which avoids lawsuits. The advantages you mentioned above about cover it, in addition to the fact that you can skirt the “due-on-sale” provision of a mortgage using a land trust.