Land Trust Detail

In a prior discussion which has since been locked out, Gary Mialocq wrote:

“In this case, a couple of guys MISUSED a land trust in North Carolina (NOT A NARS LAND TRUST), making themselves beneficiaries and ripped off the Seller. They could have done it just as easily using a LEASE OPTION or subject 2.”

Does this mean it is illegal when acquiring a property ‘subject to’ to make my LLC the beneficiary of the land trust? The above post makes me think that the seller somehow has to be a partial beneficiary to keep it legal. Clarification please!


I don’t know how others do theirs, but this is how I do it:

  1. A (title-holding) land trust is created in the name of the current owner (the settlor) who holds a 100% beneficiary interest. No one else is involved, only the owner and his/her trustee. We always use a non-profit corporation as the Trustee.

  2. Escrow is opened to facilitate the assignment, in the existing land trust, of beneficiary interest to co-Beneficiary.

  3. A Beneficiary Agreement is created between beneficiaries wherein the property’s Mutually Agreed Value (MAV) is established in order to determine settlor beneficiary’s beginning Beneficiary Contribution (equity and/or any non-recurring closing costs, etc.). This documentation also reflects all co-beneficiary contributions (equity contribution and/or non-recurring costs).

  4. A Possession and Occupancy Agreement (triple net lease) is executed between the trust and the 2nd co-beneficiary (responsibility for collections and disbursement are then assigned to the Trustee.


  1. The property is either sold by the trustee at FMV, or purchased and refinanced by co-beneficiary at FMV.

  2. All loans are retired (out of the proceeds of the sale or refi).

  3. Costs of disposition are paid (e.g., escrow, re commissions, etc.).

  4. The settlor beneficiary then is refunded its beneficiary contribution (beginning equity and non-recurring startup costs).

  5. The co-beneficiaries are refunded their beneficiary contributions (non-recurring startup costs, equity contributions, escrow fees, any part of commissions paid at inception, etc.)

  6. ALL remaining (net) proceeds are distributed among beneficiaries in proportion to their respective percentage of interest held.

I figured the land trust is what you were referring too. How do you find a non profit that will act as a trustee or do you just create your own non profit? 8)

You can just use someone that you trust.
You can even use someone out of state.
Then get limited power of attorney from the trustee.
I pay my trustee $12 a year. And yes when I go once or twice a year to visit my out of state trustee for a meeting, I can write it off. :wink:



The NARS Trust includes the trustee services of a non-profit corporation that is excellent.