Mike, thanks for the kudos however I’m not a particularly bright person at all; I merely study a lot, attend lots of seminars, and try to apply what I learn to my deals.
If you want the appearance of additional protection from multiple layers of trusts and entities, you can do this ad infinitum.
I’m no lawyer, however you may want to think thru the ramifications of this strategy.
First of all, you must be prepared to defend the people/entities that act as trustees of your trusts and never leave them holding the bag, so to speak.
Offshore entities are often treated in a special manner by US courts and certainly by IRS.
Lastly, IMO, the appearance of concealing identities of real owners will do nothing to support your position should you wish to defend your asset or assert a claim upon another, as a faceless owner does not make for a compelling plaintiff or defendant in a courtroom. Again, I’m not an attorney, but I’ve seen more of this stuff than most people that post on this forum would imagine since my business focuses on attorneys and their probate and trust clients.
There’s a book on using land trusts by attorney Mark Warda (and occasionally taught by Jack Shea) that’s a good reference source. Check out Galtpress.com and see if they offer it online.
Lastly, in my State (CA), entities such as LLC’s and Corp’s registered in other States outside of CA are treated differently than those formed and registered here. I’d suggest you get clear on any such differences or implications in your home State before making any hard and fast decisions on holding entities or trusties.
I have been researching properties to purchase on the courthouse
steps and
have found a common trend occuring which I am trying to figure out.
Banks
are foreclosing on the mortgage holders/previous title holders of the
property. But the property, was deeded months prior into a land trust
llc.
The properties are still on the auction block bieng foreclosed on with
the
original titleholder, but yet the title has been quitclaimed and a
warranty
deed issued into an Land Trust prior to the foreclosure and it is not
shown in
the foreclosure documents. I dont believe the original owners own the
land
trust, but an investor.
Here is my question. Why would anyone place or try to save a property
and
quit claim it to a land trust, if it is still getting foreclosed. Isnt the
investor or
"land trust putting themselves at risk? The land Trust might protect
them
personally, but how does this specifically work. My guess is there is a
loophole for the reason behind doing this…Has anyone ever done this
or
experienced this type of situation?
Posted by John Merchant on September 09, 2009 at 12:30:04:
Another great resource you might find FREE is Bill Bronchik’s great little article “No Due on Sale Jail” he wrote some time back; also whatever else you might find online by BB on subject of use of LTs.
I know I’ve found another article or two by BB on use of Trusts so if you’ll do an online scan you might find it/them too.
I’m not recalling right now but it seems to me that NOLO Press has a book on formation and use of Trusts that’s worth reading.
Also, and specially valuable in PRC (Peoples’ Republic of CA) is book “Owner Will Carry” written by a couple of CA REIs and specially referencing CA law.
I can’t even begin to tell you how valuable this book has been to me on use of trusts, corps and LLCs in REI and the authors, Bill Broadbent and Geo Rosenberg did an outstanding job on this single volume.
I’ve found most law libraries of any size have other textbooks on Trusts so check your county LL too.
It’s becoming fairly common practice for investors to purchase property subject to existing mortgages of record and vest title ownership in a trust, for reasons I won’t elaborate here.
If the investors abandon the property/project, the lender(s) merely foreclose on their lien depending on the recorded position. If it was a first mortgage lender, they would complete their foreclosure on their existing lien, which would wipe off the prior owner’s equitible interest, along with any junior lienholders and subsequent investor’s interest, as well.
As to the land trust being as risk, I think that’s part of the appeal of this practice; each property has a separate, unique trust which is expendable.
Rick, you are a true genius, and I must say in this forum you are one of
the few that really illustrates how these different strategies truly work.
Thanks for replying, I want to learn more about this so I can protect
myself on future deals.
The way I understand it, Cant I have the beneficiary of the Land Trust
be an LLC or S Corporation…To really keep things kind of complicated
if you know what I mean. Ive heard others say to set up the LLC or
Corp. in NEW Mexico or South Dakota but I never truly understood
completely the advantages…Your thoughts?