Re: Wrong, John… - Posted by John Little
Posted by John Little on May 25, 2011 at 07:58:29:
I find it pretty funny, Chris, that someone with an obvious agenda against land trusts would go so far. You are so wrong when you say that anything you do with a property is subject to the same laws. Once title transfers to the Trustee, the Seller no longer owns real property, he owns PERSONAL PROPERTY. Who says so? The IRS. In fact, the IRS allows the RB, who is only a Lessee and a Beneficiary, to write off the mortgage interest. A Lessee in a Lease Option can’t do that.
Transfers of beneficial interests are NOT SALES, do not require transfer fees. They are transfers of personal property and do not affect the title which is still held by the Trustee.
In court, if I am asked if I own real property, I can legally say no. If I am asked if I own a beneficiary interest in a land trust, I will say yes. HERE IS WHERE YOU ARE WRONG. A creditor may reach the corpus of a land trust, unless there is more than one unrelated beneficiary (as with the model I use). This concept appears to be based upon the idea that a co-beneficiary in a land trust can be seen as a ?partner,? and a claim or charging order effected against a co-beneficiary would be impossible without a dissolution of the entity (the trust), and since an unrelated co-beneficiary is not responsible for the actions of the other: such dissolution would not be allowed.
Henry H. Keno on Land Trusts, IICLE, Springfield, Illinois (1989)
Smith v. B of A; Houghton v. Pacific Southwest Trust and Savings Bank: 111 CA 509, 295 p. 1079,
The CA. Code of Civil Procedures §697.510]
This is the law, Chris, and I know of no case in over a decade of using and teaching about land trusts, that proves me wrong. Your theory is correct on its face, but you have overlooked the beauty of having a co-beneficiary.
One final thing, you say that when a beneficial interest changes, ownership changes. Not the way I do it. The Seller RETAINS a % of ownership and his Trustee retains legal ownership. NO SALE. What we do with the ownership of the personal property has no effect whatsoever on the title. It is private business of personal property governed by UCC regulations.
Where you are quoting Bill, you say that after the fact the Seller transfers his beneficial interest to me. THAT IS WRONG. He always retains a percentage of ownership and the DOS is not affected. I’m afraid that you are going to have to be the one who cries in his milk. Thanks for the lively discussion.