Stop Those Snoopers:
How Land Trusts Protect Your Privacy
In prehistoric times (times before
the Internet), if you wanted to know what your new neighbor paid for
their house, you had to hop in your car and trek on down to the
local county courthouse and go through volumes of books to find it.
You’d have to corral a courthouse employee (no small feat there) and
have him/her show you how to search the Grantor/Grantee indices.
After stumbling through book after book, you might find the
information you were looking for. The problem became much more
difficult should you want to find out how many properties the local
fixer upper guy has purchased in the last few years. You’d probably
have to hire a title examiner to find that kind of information.
Keeping in mind the cost, it still could take several days to
several weeks depending on the examiner’s schedule.
With the coming of age of the
Internet, all that’s changed. Most counties across the country allow
access to public records online. A few require you to register to
use it and some require you to pay a fee for its use. The majority
allow anyone access to their public records database. The search
engines are easy to use; allowing you to enter information based on
owner’s name, street address and year(s) of purchase.
As more and more of our personal information is becoming available
for all to see, for those that are interested in keeping the privacy
of their real estate purchases out of the eyes of the general
public, there is a solution: the Land Trust.
Land trusts are the most useful and
least known legal device used by real estate investors. The essence
of the land trust has one person (the Trustee) hold legal title of a
property for the benefit of another (the beneficiaries). The
beneficiaries hold no interest in the property. What they do hold is
an interest in the trust. A trust agreement is created which defines
what the Trustee does (which is usually to only hold legal title and
follow the directions of the beneficiaries) and what the percentage
interests in the trust are among the beneficiaries.
There are many benefits to holding
property in a land trust. I’ll address some of them below. First and
foremost is the issue of privacy. There is no public record of the
beneficiaries of the land trust. The trustee is listed as the owner
of the property and only they know who the beneficiaries are. So,
those snoopers checking courthouse records online (or the old
fashioned way at the courthouse) won’t find any record of who the
beneficiaries are of the land trust. This allows investors to
maintain a low profile, protect them from the every day annoyances
of ownership and keeps their real estate assets from public view.
Second, using a land trust avoids
probate. The land trust can allow your property to pass to who you
want by listing them as “contingent beneficiaries”. Upon the
death(s) of the primary beneficiaries, the contingent beneficiaries
would then become the primary beneficiaries. The land trust also
avoids setting up a separate probate in a second state where
property may be owned. For people living out of state or out of the
country, this is a valuable tool. Because a beneficiary’s interest
in a land trust is considered personal property, those assets would
be collected and simply transferred to the state or country where
the beneficiary had resided.
Third, the land trust enables
individuals to keep liens and judgments off the land trust property.
If you unfortunately, have a lien or judgment rendered against you,
those liens and judgments cannot be attached to the property. There
are some minor exceptions to this, but by and large, your personal
liens and judgments will not attach to land trust property.
Fourth, transfer of ownership is quite easy with the use of a land
trust. Because an interest in a land trust is considered personal
property, only a signature from the trustee is required to transfer
trust ownership. No witnesses or notaries are needed.
Other benefits of a land trust
include property management, title insurance savings as well as
limited liability.
In choosing a trustee, one should look to an individual or
organization knowledgeable and trustworthy in the workings of the
land trust. Banks and attorneys usually make the best trustees.
Banks have integrity but their fees can be unreasonable. Most
attorneys charge reasonable fees and can provide additional security
by virtue of the attorney-client relationship. Unless under court
order, an attorney trustee cannot divulge the names of the
beneficiaries of a trust he is administering.
You, your spouse or relatives can
also be used as trustees. If you choose yourself or your spouse, you
risk the loss of the anonymity of the ownership of the property by
the last name being the same. With relatives be sure you can trust
them (or they have a lot of assets themselves) as they have the
power to sign away the ownership of the property at any time they
want, regardless of what the beneficiaries want.
Hopefully, I’ve touched on enough information showing the
significant benefits of using a land trust. The investor should take
this into account when contemplating the purchase of investment
property.
About the Author:
Walt Carey is a Florida attorney concentrating in real estate law
and asset protection. He is admitted to practice before the bars of
Florida, North Carolina and Massachusetts. Walt is also a licensed
Real Estate Broker in those states as well.
© 2004 Walter P. Carey All rights reserved.
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About
Walt Carey | |
Walt Carey comes to Cape Coral, Florida with a wealth of
knowledge in the Real Estate field. Walt is a licensed
attorney and real estate broker in Florida as well as
North Carolina and Massachusetts. He has been practicing
law for over 10 years and has focused his practice in
the real estate and asset protection area for the past 7
years. Walt has worked extensively with investors
counseling them on buying and selling methods, document
preparation and review, entity structuring as well as
wealth and tax planning strategies.
We are proud to have Walt as part of the “Florida Gulf
and Land.Com” Investment Team.
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