can you put a bank-mortgaged property into a trust w/o issues?

if i purchased a 4 unit apt (owner occupied) with bank financing, would putting it into a trust be the means of protection from tenants, etc?

if i did that would the bank disapprove?

I am certainly not an expert on trusts, but I know the bank, nor anyone else can stop you from putting a property into a trust. They don’t have to approve for you to be able to do it.

would putting it into a trust be the means of protection from tenants, etc?

Putting a property into a trust effectively erases your personal/business name from public records, thus making it much more difficult for anyone to find out who actually owns the property.

If by “protection” you mean will it protect you from lawsuits legal damages, etc, then the answer is no, it will not. What it will do, as stated, make it harder, but not impossible, for someone to prove that you own the property in question.

Properly prepared legal contracts, good tenant management, an astute attorney and good insurance will “protect” you from your tenants.


Putting a property into a land trust, if properly structured, provides the best protection from creditor judgments, tax liens, and probate and keeps the property hidden from actions in bankruptcy, marital dispute, and lawsuits.

The reason you are protected is the trust is not governed by mortgage law, but by the UCC. Remember, the trust is not real property, it is personal property. As long as there is more than one unrelated beneficiary, a co-beneficiary in a land trust can be seen as a “partner,” and a claim or charging order against a co-beneficiary would be impossible without a dissolution of the the trust. Since an unrelated co-beneficiary is not responsible for the actions of the other: such dissolution would not be allowed. Thus, you have absolute protection.

Da Wiz

I think the only thing to add here is the fact that if something happens at that property and you do get sued they can only come after you for what is in that Trust and can’t come after you for your personal property.

You got it. They can only come after you for what is in the trust. The ONLY thing in the land trust IS your personal property. It is also the personal property of your co-beneficiary. The creditor can’t get to the trust property due to the non-partitionability of personal property by judgment creditors.

Its not just land trusts where this issue comes into play…you can’t go busting up a partnership just because one of the partners owes you money and doesn’t pay. You may be able to lien his partnership interest, but you can’t force the sale of it, or a sale of the company’s assets to satisfy your judgment. Believe me, this system has been tested for over 22 years and many thousands of trusts without a hitch. It is armor plated.

I urge those of you who don’t quite understand what trusts are and how they work to review some basic trust law. 'Suggest: Loring, Kenoe, Bogert, Moynihan, and the Uniform Trust Code itself (Google 'em).

Da non-lawyer Wiz

wiz, how bout this…

Am I correct in saying that when you put a home in a trust that you effectively transfer title from you to owner to the “trust entity”, so now title reflects the owner of records as the truts? In other words if you go to the court house and do a title search it will reveal the property being owned by the trust. The title will show a conveyance of ownership from you to the trust on the execution date.

The problem w/ this is that all conventional realestate notes contain the “due-on-sale” clause, which would be triggered in the event of title transfer.

I’m sure there may be a way around this, but I’m not aware of it if there is. Please advise?

Hi Skydive,

My closest friend is a former Hollywood stunt man and base jumper, so I’ll do my best for you. When you use a land trust, you deed the title to your trustee. In my case I always use Equity Holding Corp. If you do a title search on any of my properties, you will find: Equity Holding Corp., Trustee. That’s it.

You never have to worry about the DOSC with a land trust. It is exempted by Federal law, specifically TITLE 12 CHAPTER 13 > § 1701j–3. Passed by Congress, it exempts land trusts:

(d) Exemption of specified transfers or dispositions. With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon—

(8) a transfer into an inter vivos trust in which the borrower is and REMAINS a beneficiary and which does not relate to a transfer of rights of occupancy in the property; MY TRUST MAKES NO REFERENCE TO OCCUPANCY AND IS IN COMPLIANCE.

I hope this is of help to you. Feel free to ask questions. We’re here to help.


Da Wiz

Gary would he also need to put that same property into a LLC–this is always the stumper for me. I now have a duplex and a personal home----should i just put the home directly into the land trust and investment into LLC --then land trust?

My personal home is in it’s own LLC… For Personal reasons LOL

Keep business and personal totally in different trusts…

When I had over 70 rentals I had over 60 Trusts. It is all about your personal comfort zone.

Never put your Trust in Money put your money in a Trust!

Did You have each property in a seperate LLC. Not for You to devulge Your personal stuff—but what would be a reason to put personal home in LLC first. Seems easier to just do the land trust—but i want to do it right --not just esy. Thanks for your response.

also for me —my main thought on the land trust especially for my ome is probate protection for my family.

I swear I think dawiz knows everything!