Recently went to a seminar, and the speaker said all your property should be in a land trust. Does anyone know how this works? Where do you get one from? Do banks care if you do this or not? How do you refinance, sell, or anything like that with a land trust. Need some kind of direction. Thanx for any info on this
I’m a real estate attorney in Florida and we won’t touch closings involving land trusts. Too much potential for fraud, etc. I’d check with local counsel in your state.
Land trusts have their legitimate uses. In general, they are over-hyped. Be sure that you carefully examine the true cost & true benefit of using such devices. Most speakers over-emphasize benefits & ignore costs (including time, hassle & confusion). Run a search, I wrote a fairly lengthy piece on LT & asset protection in general.
The speaker said all your properties should be in land trusts. In general I agree with that. I also agree with John that they are over-hyped. I disagree with the attorney that doesn’t post his name. You might want to look at http://www.warda.net/LTSC.html if you deal in Florida.
One benefit that I find is the anonimity. My name doesn’t appear on the tax roles except for others property that I am trustee for. Another benefit is the flexibility. I don’t have to re-record a public document every time I want to change the beneficiary.
The idea is that legal and equitable title reside with the trustee but under constraints put forth by the beneficiarys. To the IRS it is nuetral as the beneficiaries report on their returns as if it did not exist. The concept in most states is that it turns real property into personalty, i.e. personal property. That has many benefits. There are many RE courses that include the land trust and a number of speaker sell them. Lenders in general do not like them because they do not meet Fannie Mae guidelines and they want everything to be conforming. By deeding in and out of the land trust the beneficiery can refinance or sell a property.
Is it a hassle? You have to record a deed to the trustee. Is that a hassle?
You have heard the old saying “an ignorant mind will say no.” When you become versed on the benefits most investors seem to use them.