Land Trusts, Trust Agreements, and Warranty Deeds - Posted by Jim LaVerdi

import · May 18, 2000, 7:28pm

Posted by chris on May 22, 2000 at 18:15:08:

Stacy-

I read the statutes mentioned and it looks like the only time they apply is when the grantor or grantee will be the trustee. As long as the buyer or seller do not become the trustee it looks like this statute does not matter.

-Chris

import · May 18, 2000, 7:28pm

Land Trusts, Trust Agreements, and Warranty Deeds - Posted by Jim LaVerdi

Posted by Jim LaVerdi on May 18, 2000 at 19:28:43:

To the board,

When taking title in a land trust, does the seller get a copy of the Trust Agreement too, or do I just keep the copy in my file cabinet? This is not addressed in the LeGrand (FSBO course) it just tells you how to fill out the agreement, and for you to retain the agreement (unrecorded) in your file cabinet. Also on the “Warranty Deed to Trustee” it has a place for “Grantor” (seller) and “Unto” (trustee) as trustee. It doesn’t have a space to identify who the beneficiary is. Now should the beneficiary be shown here and then an assignment of beneficial interest form filled out and kept with the trust agreement? . I am led to believe that you want the beneficiary to be the owner of the property and visible on the deed, and the assignment of interest hidden. This area is an area I am a bit confused on and your help is greatly appreciated

Thanks,

Jim LaVerdi

import · May 19, 2000, 5:12pm

Re: Be careful of non-state specific advice - Posted by Stacy (AZ)

Posted by Stacy (AZ) on May 19, 2000 at 17:12:09:

Jim, I suggest that you research the AZ statutes, title 33-404. If you need a link to the site, here it is:

http://www.azleg.state.az.us/ars/ars.htm

Quick synopsis:

Deed to trustee must identify beneficiary and be recorded.
Transfer of beneficial interest must be recorded, and must show the identity of the beneficiary.
A conveyance not recorded with this disclosure can be voided by the original owner any time within 2 years of conveyance.

Now, I don’t want to get into what “can” happen if you don’t comply, or what you should do, but I think you should be aware of this. And as a general rule, I recommend always confirming that any given advice applies to your specific state.

Stacy

import · May 19, 2000, 2:13am

Thanks, Scott, Terry & Glenn - Posted by Jim LaVerdi

Posted by Jim LaVerdi on May 19, 2000 at 02:13:26:

Thanks for clearing the air on these issues. I will be listening to the Land Trust tape again as well as re-reading the written material. I will , more than likely be back with some more Qs!

Thanks Again,

Jim LaVerdi

import · May 18, 2000, 9:09pm

Re: Land Trusts, Trust Agreements, and Warranty Deeds - Posted by Terry (Dallas)

Posted by Terry (Dallas) on May 18, 2000 at 21:09:40:

I’ll take a stab at this.

The seller should not get a copy of the trust. It is kept by you. The trust name is usually “123 main street trust” The name of the property is an easy way to do it.
The other thing you can do is take the property in your name then transfer title to the trust with a warranty deed or warranty deed to trust.
The trustee is listed and signs the documents. The actual befeficiary is listed in the trust document. again this is best left at home. If you need or want to change the befeficial interest you can still easily do this with an assignment, You can change the trustee with other documents if you need to.
Hope this helps
Terry

import · May 18, 2000, 9:07pm

Re: Land Trusts, Trust Agreements, and Warranty Deeds - Posted by Glenn-OH

Posted by Glenn-OH on May 18, 2000 at 21:07:30:

Since the trust is a revocable, inter-vivos trust, the grantor is beneficiary. If anyone else was show on the deed besides the trustee of the trust, then that would be a transfer of equitable title, which would be a DOS violation.

import · May 18, 2000, 9:04pm

Jim: Here’s your answers… - Posted by Scott

Posted by Scott on May 18, 2000 at 21:04:14:

>When taking title in a land trust, does the seller
>get a copy of the Trust Agreement too, or do I just
>keep the copy in my file cabinet?

No the seller does NOT get a copy and yes it STAYS in your files.

>Also on the “Warranty Deed to Trustee” it
>has a place for “Grantor” (seller) and “Unto”
>(trustee) as trustee. It doesn’t have a space to
>identify who the beneficiary is. Now should the
>beneficiary be shown here and then an assignment of >beneficial interest form filled out and kept with the
>trust agreement?

NO NO NO… The whole KEY to the Land Trust is PRIVACY. You want to ‘hide’ the beneficary identity.

>I am led to believe that you want the beneficiary to
>be the owner of the property and visible on the deed,
> and the assignment of interest hidden.

No… read the above answer…

>This area is an area I am a bit confused on and your >help is greatly appreciated

Listen to the Land Trust tape again… and YES is does take several listenings before it sinks in…

Glad to see you’re booting this around in your head.

Keep the Q’s coming. To your success.

Scott

import · May 22, 2000, 7:33pm

Easy way around AZ law - Posted by William Bronchick

Posted by William Bronchick on May 22, 2000 at 19:33:03:

A violation of rule #1 is not jail time, it results in rule #3. Thus, you need to either make the beneficiary of the land trust another trust (“personal property trust”, included in my land trust course) or use a “dummy” entity in the middle of the transaction so that the grantor and grantee of the voidable transaction are controlled by you.

As for rule #2, it does not apply if the trust pays out all assets on the death of the grantor, which my land trust does (irrelevant, sinc e the grantor is a corporate entity, which never dies!)

import · May 20, 2000, 1:35pm

Arizona Land Trusts - Posted by Brad Crouch

Posted by Brad Crouch on May 20, 2000 at 13:35:01:

Stacy,

I read the statute and didn’t see anything that would preclude using an LLC or corporation as beneficiary. Any reason why this wouldn’t work?

Brad

import · May 19, 2000, 6:25pm

Uh-Oh!.. Different States/Different Laws! - Posted by Jim LaVerdi

Posted by Jim LaVerdi on May 19, 2000 at 18:25:29:

Thanks for the info Stacy! I need to dig into this new twist now.

Anybody else that can add to this issue please feel free to do so.

Jim LaVerdi

import · May 22, 2000, 9:47pm

Re: Yes, I tried that argument - Posted by Stacy (AZ)

Posted by Stacy (AZ) on May 22, 2000 at 21:47:46:

Hi Bill-

You are correct, Rule #1 is not jail time, but the conveyance is “voidable by the other party”. If exercised it could end up that the buyer’s beneficial interest is taken away. Not jail, but not good either. I understand your work-around, but I wanted to point out to Jim that none of the prior advice on this thread would have worked to avoid this, since AZ law is obviously different. Actually, I’ve used a different strategy completely, so far. But if the risks are ever above my threshold, I’ll use your work-around.

As for rule #2, you may recall that I emailed you about my concerns, and you sent back a reply similar to your post. Unfortunately, I have yet to get anyone to agree with your interpretation of subsection D. Everyone interprets the law as applying only to the actual occasion of a beneficiaries death. If “upon the death of a beneficiary” the interests of the dead guy vest in his estate, or another previously identified beneficiary, there’s no need to disclose change in beneficial interest. Well, I don’t plan to die when I have the seller transfer all beneficial interest to me, as buyer. In other words, this clasue was obviously planned to speak to what should happen when a beneficiary actually dies, not to allow special treatment of a trust that happens to plan ahead for this occasion.

Anyway, you’re the legal eagle, not me. But I can’t get anyone around here to agree with you on this one.

And let me say, I feel completely in-between you (who I repect greatly) and everyone else I have to deal with to get the job done. Remember, my original post was to inform Jim that the advice he received was incorrect for AZ. I’ll stand pat on that, at least.

Stacy

import · May 21, 2000, 3:27am

Re: Arizona Land Trusts - silly law - Posted by Stacy (AZ)

Posted by Stacy (AZ) on May 21, 2000 at 03:27:57:

Hi Brad-

You are correct. There’s nothing stopping a corp or LLC from receiving beneficial interest of a trust. But a corp or LLC could buy the property without the land trust, as well. The main concern is keeping the transfer secret, away from the prying eyes of the lender.

If the only thing that had to be recorded was the deed to trustee, no problem. A lender would see (what looks like) an estate planning maneuver, with the borrower placing the property into his own trust, which does not violate the DOS. But a transfer of beneficial interest of the trust must also be recorded, identifying the beneficiary (person, corp or LLC). This pretty much takes the “secret” out of the equation, and any lender who looks at the county records would immediately know the DOS was violated. Not good.

See ya-

Stacy

import · May 22, 2000, 7:42pm

The ultimate source . . . - Posted by William Bronchick

Posted by William Bronchick on May 22, 2000 at 19:42:22:

Not to sound egotistical, but i am the ultimate source on land trust. Not just because I have spent countless hourse researching the law in every state, but I get emails from people all over the Country that put my materials to use. When he get a snag in a particular state (like AZ), we figure out a way around the law, then add the info to my course.