I have been using Land Trusts for over 30 years, but every now and then someone will challenge me as to the purpose and “honesty” in using a Land Trust to hold title to real estate investments. Let's clear the air.
Recently I was talking to a real estate investment club owner about speaking to his club regarding land trusts. He said, “We do not believe in using Land Trusts because they are dishonest.” He then went on to explain how someone had come to his club and spoke about Land Trust and that led him to believe that the use of a Land Trust was for deception and taking advantage of people.
I told him that I was sorry that he had been misinformed about Land Trusts and that he should reconsider their use and benefits. I went on to review with the club owner why it is important to NOT have your name in the public records as owner of real property:
10 IMPORTANT Reasons To Use Land Trusts
1. A group of investors may be purchasing several properties for a special purpose and it may be that the desired result can be best accomplished if the objective is not made public.
2. Co-owners might desire that the interest of each beneficiary must be kept private.
3. An individual owner might not want to be hassled with inquiries regarding the property.
4. A real estate investor might not want his competitors to copy his acquisition techniques.
5. Real estate investors do not want their tenants to know they are the “owner” of the property (helps with day-to-day management and lease renewal negotiations).
6. Co-owners want to know that a lien or judgment or divorce of one owner will not affect the title to the property.
7. Out of state owners can avoid probate and other legal issues upon death-smooth transition of succession.
8. A group of heirs can inherit a property held in a land trust with ease of management (by the director) and no need for a partnership agreement and a partnership tax return
9. Co-operative housing corporations may elect to hold title to their land and buildings in a land trust. They could then issue beneficial share to their residents in place of stock certificates-simplifying control and record keeping.
10. When a Trustee of a Land Trust signs the mortgage (that gets recorded in the county court house records) the debt will not show on the borrower's credit report.
Land Trusts have been used by American citizens for over 100 years for good reasons. There are many legitimate reasons to use a Land Trust for privacy and asset protection. No one will protect your assets like YOU will. Learn all you can now because “old and cold” matters. Ever since 9/11 it gets harder every year to be private and protect your assets. Do it now! Don't delay!