Land Trust Question - Posted by AbbieHoffman

import · July 26, 2003, 9:56am

Posted by Brad Crouch on July 27, 2003 at 21:02:47:

. . . I just read Bronchicks course on Land Trusts. Best around.

Brad

import · July 26, 2003, 9:56am

Land Trust Question - Posted by AbbieHoffman

Posted by AbbieHoffman on July 26, 2003 at 09:56:59:

If I put a property I own into a land trust, is it neccessary for me to inform my insurance company and have them change the name of the insured to the name of the land trust…or can I just leave the insurance under my own name because I am the beneficial interest?

import · July 26, 2003, 4:30pm

Re: Land Trust Question - Posted by Jonathan Rexford

Posted by Jonathan Rexford on July 26, 2003 at 16:30:18:

Speak to your agent about this. But here is what mine told me and this is what we do for my sub2 deals also.

Since the trustee owns the home as its recorded on the deed.

Here is what my policy reads:

_____________, as Trustee
of the ________________________ trust
Jonathan Rexford ATIMA

and of course if there is a lender of the property they will also be listed as Loss Payee.

import · July 26, 2003, 6:12pm

Re: Land Trust Question - Posted by Rich_Va

Posted by Rich_Va on July 26, 2003 at 18:12:40:

I’d be careful how you organize your Trust paperwork. The “Trustee” should not be identified as the owner, this can cause problems and even negate the whole purpose of developing a trust. A property built trust and corresponding deed should allow for hidden ownership and only the Trustee knows who owns it. If you record anything that shows a different owner, you can be asking for problems.
Rich

import · July 29, 2003, 2:52am

Re: Land Trust Question - Posted by Brenda Whittaker

Posted by Brenda Whittaker on July 29, 2003 at 02:52:46:

I never understood Ron LeGRand’s land trust thing - I have been told by AZ attorney’s that there is no way to allow for hidden ownership. Land trusts are illegal, they tell me. ???

import · July 27, 2003, 7:51am

Re: Land Trust Question - Posted by Jonathan Rexford

Posted by Jonathan Rexford on July 27, 2003 at 07:51:37:

Well I think that he should contact his agent for sure. The Trustee does hole Legal and equitable Title.

The trustee retains both legal and equitable title to the real estate. Bill Bronchcicks Manual.

Here are some more references for trustees
http://www.daileylaw.com/glossary.html

More on trusts
http://freeadvice.com/law/540us.htm

When it comes down to making a claim for insurance purposes they are going to ask who is the owner. The one mistake made is insurance and having it all spelled out wrong. I personally have never made a claim. But I have spent countless hours with other investors and my insurance agent to hammer out issues on how I was going to be paid just in case of a claim.

import · July 26, 2003, 8:59pm

Re: Land Trust Question - Posted by Brad Crouch

Posted by Brad Crouch on July 26, 2003 at 20:59:19:

Rich,

The trustee IS the owner! If you have paperwork that shows anything different, please share it with us.

When you deed a property into a trust (the deed is all that is recorded), the trustee is shown as the owner of a property . . . in a trust.

Brad

import · July 26, 2003, 7:59pm

Let me Rephrase - Posted by AbbieHoffman

Posted by AbbieHoffman on July 26, 2003 at 19:59:44:

I guess my only question was…is it OK for me to carry insurance in my own name for a property that I have in a trust and am the beneficial interest of?

Would I run into a problem because the deed is not in my name…even though I am the owner?

import · July 26, 2003, 9:49pm

Incorrect… - Posted by Paul

Posted by Paul on July 26, 2003 at 21:49:20:

the beneficiary of the trust is the owner. The beneficiary and trustee should never be the same person or entity. The trustee is shown as the trustee on the deed, not the owner.
Paul

import · July 27, 2003, 8:22am

Re: Let me Rephrase - Posted by Rich_Va

Posted by Rich_Va on July 27, 2003 at 08:22:59:

As the Trustee, you can change insurance all you want. You control everything there is to do with that property. If the insurance company won’t work with you (don’t know why they wouldn’t) then get a new one. I use State Farm for my Sub-to deals.

With Regard to ownership/equitable interest/etc. This is obviously a very advanced investment strategy. There is a lot of confusion that can set in and if not absolutely understood, can cause a lot of problems.
The Trustee is not the owner of the property. He/she may have leqal title to the property and can do whatever with it, but the beneficiary has equitable title since they are the “Beneficiary” of the trust.

When you record the deed you should have it granted from the Seller, to the Trust and then have the Trustee next to the trust name.
This does not mean that the Trustee is the Owner. The trust owns it.
The Trustee is responsible for controlling this property “Trust” for the benifit of the Beneficiary. When all is said and done, the the Beneficiary will get the proceeds and if its all done correctly, this will be you.
Hope this helps clear some things up.
Rich

import · July 26, 2003, 9:09pm

Re: Let me Rephrase - Posted by B.L.Renfrow

Posted by B.L.Renfrow on July 26, 2003 at 21:09:58:

Uhh…you AREN’T the owner; the trust is the owner. The risk of not having the insurance written correctly is that if there is a loss and a claim is filed, it could easily be denied if the named insured isn’t really the owner…and that would be a big bummer.

Best thing is to ask your insurance agent and follow his or her advice. If – as sometimes happens – the agent just has no clue about a land trust and isn’t receptive to your explanation, it’s time to find another agent.

This is NOT an area where you want to just let it slide and hope everything works out OK if there is a loss. You want to talk to your agent and make SURE everything is set up correctly.

Brian (NY)

import · July 26, 2003, 8:02pm

Re: Let me Rephrase - Posted by AbbieHoffman

Posted by AbbieHoffman on July 26, 2003 at 20:02:08:

Also…is there any chance the Insurance Company would be upset about the fact my property was put into a trust…is it best not to mention it?

import · July 27, 2003, 2:50pm

Sorry Paul . . . - Posted by Brad Crouch

Posted by Brad Crouch on July 27, 2003 at 14:50:46:

Paul,

Sorry Paul, not trying to be adversarial but you may want to check out land trust concepts a little deeper. I shouldn’t care maybe, but I really am trying to help.

The post you just made is in error. In a Land Trust, the trustee holds both the equitable and the legal title. This is why you shouldn’t use a trustee that you don’t trust.

In a standard living trust, the trustee has all the “power” and can make decisions regarding the corpus of the trust, as he/she sees fit. This is a trustee “driven” trust.

However, in a land trust (a form of a living trust) the trustee must comply with the wishes of the beneficiary. This type of trust is a “beneficiary driven” trust. But the trustee still holds the equitable and the legal interest. “Legally”, the trustee is the “owner” of the property in question. In the majority of public records, the trustees name comes first, followed by the name of the trust. Most county recorders won’t allow it any other way.

Don’t take my word for it . . . check it out for yourself.

Hope this helps,

Brad

import · July 27, 2003, 7:53am

Correct! - Posted by Jonathan Rexford

Posted by Jonathan Rexford on July 27, 2003 at 07:53:46:

The trustee claims legal & Equitable Title…Read the Trust agreement.

Read the the Powers and Duties of the Trustee.

There are several points of interests for Trusts

import · July 28, 2003, 9:48am

Re: Let me Rephrase - Posted by Long Beach Ed

Posted by Long Beach Ed on July 28, 2003 at 09:48:15:

Here in New York, where insurance companies are looking for any excuse to drop policies, a call to them may create trouble. My insurer said that I would have to pay “commercial rates” if the property were in as trust.

I have had opinions that said as long as I owned a beneficial interest, I would be covered on the trust property if the insurance were in my name. I am certain this is the case for title insurance, but that may be a different animal.

I’ve done a bit of research on this but cannot get a straight answer. As beneficiary, you certainly have an insurable interest. The Trustee, however, would have no coverage, and I suppose he might be named in a suit.

Just my thoughts… if you hear anyhting more decisive, please pass it along.

Long Beach Ed

import · July 27, 2003, 3:31pm

Thank you- I stand corrected. Your 100% correct. - Posted by Paul

Posted by Paul on July 27, 2003 at 15:31:03:

I appologize and appreciate your knowledge and the education you’ve given me.
Best wishes,
Paul

import · July 27, 2003, 3:35pm

You are right. Thank you for your insight. - Posted by Paul

Posted by Paul on July 27, 2003 at 15:35:42:

Best wishes,
Paul