What is the advantage of Land Trust? - Posted by Steve

Posted by JT-IN on July 21, 2003 at 07:06:51:


Yes, we use them occasionally… LT are useful when you want the transaction to be private, since the owner, referred to as the Beneficial Interest, is not diclosed in public record. The only party disclosed is the Trustee, who has a Fidiciary Responsibility to maintain the privacy.

One of the main benefits to a LT is when you purchase property “Subject To”, whereby the original mtg is NOT being paid off at the time of the transfer of the property, and this technically violates the terms of the mtg cotnract. In order to shield this transaction, a LT is used which keeps the Lender from knowing whether the owner has transferred the property, or simply put it into a LT for themselves.

One other benefit of the LT is that it will bypass probate, in the event of the death of the Beneficial Interest. This can be an efficient way to plan for the inevitable, which can save on probate fees and eliminate tying up of property during the normal probate process. This latter benefit is rarely dicussed here on creonline, but it is an effective Estate Planning tool and used widely with higher Net Worth investors.

It is a shell game with the title of the property, that can work quite effectively, depending upon the intended outcome.


What is the advantage of Land Trust? - Posted by Steve

Posted by Steve on July 20, 2003 at 21:36:03:

Has anyone used Land Trust and what is advantage of it?


Forgot something . . . - Posted by Brad Crouch

Posted by Brad Crouch on July 21, 2003 at 18:01:16:


I remembered something a couple of hours after I made the previous post. In an effort to get your question answered as completely as possible, I am pasting in one of my old posts:

Advantages to using Land Trusts

Posted by Brad Crouch on February 25, 2003 at 13:13:23:

Hello everyone,

I came across this list from a Florida lawyer and thought it might be of interest. Permission to re-print has been granted.

Advantages of Land Trusts

So many people have asked us why they would want to use a land trust that we have made this special page listing all the advantages of land trusts.

By using a land trust no one knows you own a property. No one knows how much a person has in the bank or what stocks or bonds you own; why should all your real property be public record? There is no public record of
the properties you own in land trusts.

This means creditors, ex-spouses, tax authorities, lawyers and others do not know you own the property and will be less likely to be able seize it.

Keep purchase price secret
By using a land trust you can keep your purchase price of the property secret.

Keep sale price secret
By using a land trust you can keep your sale price of the property secret.

Keep change of ownership private
When you sell a property in a land trust, you can sell the beneficial interest of the trust, rather than conveying by deed. This way no one knows the property has been sold.

Lower property taxes
Many property tax offices raise assessments when a property is sold. Since a sale of the property can be kept secret and even when deeded the sales price can be kept secret, these cannot be used by the tax offices to raise taxes.

Avoiding liens
Liens, judgments and other claims against you or your partners are not liens against the property. This means you can buy and sell properties, even if you have judgments or liens against you.

Avoiding probate
When you die you can have your trust property instantly go to whomever you name in your land trust. No probate, no delay, no lawyers.

Avoiding lawsuits
Lawyers are eager to sue people who own lots of property. If it doesn’t look like you own much property it is less likely someone will sue you. Or if they do sue you there is a better chance they will accept settlement with your insurance company than go after property they don’t know you own.

Ease of control
When you have several partners owning a property, a land trust can allow you to manage it more easily.

Ease of management
When you are dealing with tenants, you can position yourself as merely an agent of the trust. This allows you to sympathize with their problems while insisting that they comply with the lease.

Ease of negotiation
When buying or selling property for a land trust you can set strict rules for the trust and then present yourself to the buyer or seller as the good guy, wanting to make the deal, but limited by the trust.

Improved financial statement
When you have mortgages in your own name the amount of debt goes on your financial statement and if you have a high debt ratio you may look like a bad credit risk. When a property is in trust the mortgage can be in the
name of the trust alone and you can list only your equity on your financial statement.

Saving on title insurance
If you sell the beneficial interest in a land trust, rather than deed the property, you do not need to get new title insurance.

Ease of transferability of interests
With a land trust you can transfer fractional interests in a property with a quick signature, rather than needing a notarized deed.

Simplification of making gifts
Interests in land trusts can be made as gifts to family members to take advantage of the gift tax exclusions.

Limiting liability
By having a land trust sign notes and mortgages you can limit your liability for a default judgment if there ever is a foreclosure.

Avoiding partition
When a property is in a land trust a disgruntled partner or heir of a partner can’t force the property to be sold.

Ease of foreclosure
When you sell the beneficial interest it is possible to take it back more easily then if you sold the land and took back a mortgage.

Safer Lease/Options
Unlike a regular lease/option where a tenant can get a vested right to the property, a lease option through a land trust can be structured to keep the option from vesting until the tenant has built up substantial equity.

Avoiding personal problems of beneficiaries
When an investment is structured in a land trust you don’t have to worry about the spouse of a divorcing partner changing the deal.

Avoiding real estate brokerage laws
Since a beneficial interest in a land trust is personal property, you could perform brokerage services for it without violating the real estate brokerage laws.

Holding judges property
Judges are allowed to own interests in land trusts without violating ethical rules.

These are just quick summaries of the benefits. They are explained in more detail in the books, Land Trusts in Florida and Land Trusts for Privacy & Profit.

Source: http://www.warda.net/LTSC-10.html

Re: What is the advantage of Land Trust? - Posted by Brad Crouch

Posted by Brad Crouch on July 21, 2003 at 13:34:33:


The primary advantage is privacy. Unless you list your own name as trustee, being a beneficiary in a land trust keeps your name off of the public records.

A land trust is beneficiary driven . . . in other words, the beneficiary is the one who has the actual control over a property, and the trustee is there only to serve (and can be prohibited from revealing the beneficiary). This is unlike most other trusts where the trustee is the decision maker.

A land trust is a form of a “living trust” . . . sometimes laws or regulations refer to a “living trust” and a land trust qualifies.

When a property is put into a land trust, it doesn’t matter who the previous owner was . . . the property is now owned by the trust. And the previous owner now has no ability to encumber the property. This can be a good way of insuring your future position . . . by taking the “car keys” away from the original owner.

If a property is in a trust, and you wish to sell the property . . . you can simply transfer the beneficial interest of the trust to the new buyer. This saves the expense of closing costs and other related cash outlays.

If you have a judgement creditor looking to get to your assets, they will be slowed down considerably if the assets are not in your own name.

Some would say that having a co-beneficiary in the trust would provide asset protection, to some extent. However, unless a legal cite (statute) is provided, this kind of statement should be regarded as opinion, and not fact.

Hope this helps,