I’m about to close of my first property. Unfortunately I’ve signed the contract with my name (I heard I probably should have used my LLC’s name). I’m just learning about Land Trusts and was wondering how it actually works. I’ve read a lot about it but still don’t quite understand it. I need to first find a trustee, right? So say, my fiance? So at closing I state the Owner name as (my fiance’s name) Trust? But before that I need to file it. I read that I could even just download a Land Trust form and notorize it. How do I make that official though? Do I need to file it in any government agency? Do I need an attorney to do this?
Also, would it be wise to put it under my company’s name and then have a land trust? Since I already have an LLC, can I use both to have added protection? Sorry in advance being so naive, I’m really new to this. Thank you.
its fine to close and then tranfer into a land trust or an LLC
I would recommend you investigate the following resources as your questions are the subject of books:
Mark Warda’s book on Land Trust (availabel on Amazon)
Ward Hanigan’s website www.foreclosureforum.com. I have taken his land trust training and it’s excellent.
In general you could just transfer title to your LLC be fine. One of the main benefits of land trust is not have your name in the public record. You could accomplish this by using your LLC as the Trustee and holding it in a trust. Land trust documents do not need to be notorized to be official. Trust are not registered entities with local/state government. In many cases, they are also disregarded tax entities as well.
What?? You’re the first I’ve heard ever say that about Land Trusts. Why do you say it’s a waste of time?? I’m planning on using it as an investment property. I plan to hold it for a while and then sell it in the future. I really don’t understand your reasoning in saying it’s a waste of time. Do you hold all of your properties in your name? I don’t plan to hold any of my properties under my own name. I was thinking either my LLC or a Trust or both.
It’s true, actually, that you could name your attorney as the trustee. But it’s probably better to name a non-profit LLC/entity as trustee, since they don’t have the same problem of life and death like a person. I suppose you could name your LLC as a beneficiary for the asset protection and already because of the nature of a trust and not having to record it for public view, anonymity is achieved.
But just an obvservation from my past experience. You should of course look to a competent real estate attorney to get legal advice.
And about it being a waste of time, I don’t think so, necessarily. If you seek the advantages it brings by using a trust, than by all means you should use it.
You can check out www.landtrust.org for more information on creating one and using their services for creation, trustee services and consulting.
Would you please confirm the accuracy of your comment. My attorney has always had every trust I have ever done notarized. Why did he go to that trouble unless it was necessary to establish the trust?
If you had said that the trust does not have to be recorded to be official, I would have agreed. I do believe the trust document has to be notarized, however.
Couldn’t be?? You are wrong there. Any living person can be a trustee.
If you had said “Probably shouldn’t be” – now that is a different issue that depends upon the reason behind establishing the trust. I do trusts for estate planning purposes and to avoid probate and I am not too concerned about anonymity, so I have no trouble being the trustee of my own trust.
A trust is nothing more than a contract. Notorization is just an independant 3rd party that verifies the identity of the signers of a particular document (contract). This is useful if someone calls into question is validity of the document due to one or more of the signer(s) not having actually signed the document.
Having the document notorized is probably useful to protect yourself if you are using a 3rd party trustee. (There is a few other things that should be done as well in that case). In my case I use an LLC to be my trustee. I do frequently however, have to submit notorized Certification of Trust to title companies, etc when buying, selling or other official business being conducted by the Trustee on behalf of the Trust. I use a Certication of Trust rather than releasing copies of the trust (as frequently requested). This is upon the strong advice of my atty.
in my opinion, this entire conversation and ones like it are a waste of time.
unless you know someone who is well-versed - personally in setting up land trusts - forget about it. don’t even waste another minute reading any threads like this.
again, this is my opinion.
and yes, you’re right about - your sister or whoever can be a trustee, but it defeats the other purposes for using land trusts.
i’ve read so many threads like this and they are all the same. i’m not saying do it or not - what i am saying is if you don’t have any background in real estate investing - avoid threads and topics concerning land trusts like the plague because they are a large part of the neurosis of “Analysis Paralysis”.
I think you posted the wrong link. This is a land conservancy group which is set up to . . . well:
The mission of the Little Traverse Conservancy is to protect the natural diversity and beauty of northern Michigan by preserving significant land and scenic areas, and fostering appreciation and understanding of the environment. Our service area includes Chippewa, Mackinac, Emmet, Cheboygan, and Charlevoix counties.
That is a little different type of land trust than this thread is talking about.
I’ll confirm it. The land trust agreement is just a contract. Notarizing it is important and smart but not required by law. In most states, agreements regarding real property must be in writing. It only makes sense to have them notarized. I imagine that your attorney is just being careful which is his job.
I don’t have a lot of experience with land trusts but I know that in Texas, a deed transferring title to the property is legal without a notary. It is just dumb to try to transfer property that way. I’d imagine that a land trust is similar.
Since you are just imagining that notarizing a trust is similar to notarizing a deed, I don’t quite see how you can authoritatively confirm that a trust does not have to be notarized to be official (legal).
You appear to be saying that a land trust and a deed are the same thing. Trust law and real estate law may not agree on this point.
The trust is just a contract between two people. And for a guy who isn’t an attorney, I know a good bit about contract law, so I still think I’m right.
However, I don’t know for certain that I am right so If you get a chance, please ask your attorney and get back to us. I just don’t think there is a statute that describes land trusts anywhere.
Land trust are specifically called out in the state laws of IL and at least 3 other states I know of. Typically those codes talk about the responsibilities and powers of the trustee (for example).
Transfering property to the LLC violates the due on sale clause of the mortgage, which allows the lender to call the loan. The lender usually finds out because the property insurance must change to reflect the new LLC owner. Keep in mind the lender usually doesn’t care as long as the mortgage is being paid. I have only heard of 2 loans being called and the lender allowed the LLC to assume the mortgage for a few hundred dollars.
Using a land trust provides a layer of privacy in the public record. The most common way is to buy in the name of the trust or to tranfer title to the trust after the closing and then change the beneficial interst to the LLC. Public records still show the trust as the owner and no one will find out unless they can get a copy of the trust, which is a private document. Changing the beneficial interest does violate the due on sale clause as well, but the only time I have heard that the lender find out about the change was during a foreclosure.
From an AP perspective, the land trust provides a layer of protection in public record searches. Investigators have to work a little harder to get the true name of the owner and then have to do a more complicated search to find any other assets.
