Posted by eric-fl on July 17, 2002 at 09:33:32:
The primary reason investors use a Land Trust in this fashion is to keep their name out of the public records, in case they are sued by someone. If you buy a property at 123 main street in the name of the “123 main street land trust”, your name never appears in the public records, and thus this property will likely remain unknown to an attorney investigating your assets for nefarious purposes.
As for the original seller filing bankruptcy, a land trust won’t offer any “protection” from that per se, since the underlying debt will still be in the seller’s name, and thus a part of the bankruptcy proceedings. If that happens, your best strategy is to convince the trustee in charge of the case that you’ve been making the payments on time, and will continue to do so. Alternatively, you could refinance the property into your name at that point, thus making the whole BK irrelevant to your investment.