Posted by Bill Gatten on May 11, 2000 at 18:04:20:
To create a simple land trust, you just need the trust document(s) and the forms and ability to create your transfer documents. You don’t need an Escrow and you don’t need an attorney.
Basically, you merely fill in the information called for in the document, have the deed recorded and you’re all set.
However…if there’s to be “complexity,” it comes in when you have to decide who to appoint (nominate) as the trustee…should it be a corporation, a Ltd Partnership, and individual, etc. Should you be the beneficiary or should you have your Ltd Ptrsp or LLC be the beneficiary. Should you have a co-beneficiary, remainder man, or not etc. And some of those factors and decisions can become VERY important if the transaction is ever questioned by the IRS, the courts, or the divesting party…OR by the lender of record.
Considerations to be most cautious about are insurability from standpoints of title and hazard insurance. When you have one party on the loan and another as a sole beneficiary in a trust that owns the legal and equitable title, insurable interests become somewhat complicated.
When (if ever) the Due on Sale Clause in an issue (or concern), just remember that, by law, any borrower is entitled to place its own property into a revocable inter vivos trust (which is what a land trust is); and is entitled to name someone else as “A” co-beneficiary (though, not “THE” only beneficiary). None-the less, DOS or not, the land trust is a most effective shield relative to the lender finding out about the transfer, so long as the trust is structured so that the Assignment of Beneficiary Interest follows the creation of the trust, rather than ‘within’ the trust (that would be seen an unauthorized divestiture of control, ownership, and vested interest, for sure).
Bill Gatten