Land Trust

General Real Estate Investing
1

Can somebody please explain a land trust? When it is best used and why?

Thanks

2

A land trust is simply an entity that can own a property. In short, the property is legally owned by the Trustee of the trust, but the “real” ownership is the beneficial interest. Land trusts provide some privacy, but do NOT provide asset protection. I use them for low-income, high risk apartment buildings. Having the property in a land trust keeps my name out of the public records and just adds one more hurdle for any low-life, scumbag contingency lawyer that wants to sue me.

Mike

3

Thanks for your reply,

So do most people use a land trust simply to help hide their identity or do have several other advantages?

Pat

4

They are also used as an estate planning tool.

5

Hi TakingAction!

I have been using and setting up land trusts for investors for the past 8 years. I believe the land trust is the most powerful weapon in the knowledgeable real estate investor’s tool kit.
However, it is a complicated, little understood vehicle. It is best understood and most commonly used in the West. In fact, many banks out West will not finance your property unless it is in a Land Trust, simply because it is a superior form of protection for the lender, compared to a mortgage.

Here are a few unique Land Trust advantages:

Keeps liens, judgments against owner(s) from attaching to the property’s title
Great Asset protection, assuming 2 or more unrelated beneficiaries
Avoid the Due on Sale Clause in mortgage, allowing safe take over of mortgaged property
Avoid tax on sale of appreciated property, assuming property stays in trust
Allows leasee beneficiary to have all the tax write offs of an owner in lease option deal, enabling you to charge higher rent

Here is an article that gives you more information on the Land Trust: http://www.linkbrander.com/go/62570

Bill Young