Keeping RE Transactions Private - Posted by IB (NJ)

Posted by forumforme_com on January 10, 2007 at 03:41:31:

I was thinking how to hide the purchase price from the public eye and came to this idea. It won’t be completly hidden though.
Make two contracts.
One contract for the assignment/finders or whatever fee that you pay to a corp. (it could be yours.)
The second one - the purchase/sales contract.
Let say you bought the property for 100K and want to sell it for 130K.
You create a corp. and make a contract with it to sell you the property (licence may be needed) or find you a buyer. The finders fee or whatever may it be in your case is paid separately i.e. not included in the price. The buyer pays the $20k or more to the corp. to get the right to buy the property at 110K or less.
If this can work, the property will be recorded at 110K or less. The public wont know what to buyer totally paid.
I am not sure if this is gonna work in your case, but just an idea to consider.

Good luck,

Keeping RE Transactions Private - Posted by IB (NJ)

Posted by IB (NJ) on January 06, 2007 at 11:16:28:

Hi All:

I’m looking to keep some of my RE deals private. Particularly my flips. I understand a little about using a land trust but I really want to know about the use of an LLC to shield public eyes from the amount of money I make on a deal.

I want to create an LLC, convey the property into the newly created LLC and then sell the LLC. Is this something that a title company understands and insures (while I’m at it, do they understand the use of land trusts as well)? Will the price paid for the LLC be kept private thus keeping the price of the property private?

Thanks in advance.


Re: Keeping RE Transactions Private - Posted by Don (VA)

Posted by Don (VA) on January 08, 2007 at 16:14:12:

The basic structure of what you describe (moving property into an LLC and selling the LLC…or moving the property into a land trust, moving the trust into the LLC, and selling the LLC) is done in the DC area and, I’m sure, in other parts of the country.

And while Mike is correct that all real estate transactions (shouldn’t say “all,” but let’s say “nearly all”) are a matter of public record, a land trust or an LLC is not real estate. A land trust is personal property.

At some point, the purchaser probably will want to bring the property out of the trust. So someone examining real estate records might, for instance, see that 123 Main Street was bought for $100,000 in 1995; transferred into a land trust in 2000; and brought out of the trust and sold in 2007 for $200,000. So there’s some information available, but not the details of any transaction (except that final sale) or who made what.

From what I hear, some title companies do understand trusts and LLCs; others don’t. You need to find out early on whether a company you’re planning on using falls into the first category or the second.

Hope that helps.

Re: Keeping RE Transactions Private - Posted by Mike-BC

Posted by Mike-BC on January 06, 2007 at 18:39:31:

You can keep your information behind the scenes by using your LLC for transacting your business details; but…

In my part of the world, all RE transactions become public domain. The information is used by governments for tax assessment purposes. This information is stored at government offices and is available to the general public for a fee. Likewise with your LLC, individuals can find out who are the principals behind your LLC by going to a government office and paying a fee.

You can hide your profits from the public, but a determined individual can ferret out the details.

Re: Keeping RE Transactions Private - Posted by IB (NJ)

Posted by IB (NJ) on January 08, 2007 at 23:17:42:

Thanks Don. I spoke to my lawyer who cautioned against the LLC. He felt that a buyer’s attorney would be concerned about any actions the LLC might have taken that exposed it to any liability. For instance, who’s to say that I didn’t smack the he77 out of some guy at the property and a day before the closing. The buyer of the LLC might be liable as the new owner of my LLC.

I wouldn’t mind if at some point the buyer took the property out of the land trust. I would just want to have the amount I actually sold the property for kept private. Would a land trust handle this?

Thanks for youe help.


Re: Keeping RE Transactions Private - Posted by IB (NJ)

Posted by IB (NJ) on January 06, 2007 at 20:07:15:

Thanks Mike. But here in NJ, we can pay a fee to find out who the Registrant and (maybe) the President is of a privately held company, but not the Principals (to my knowledge). I thought I read information on here years ago about selling an LLC that holds a property and shielding much of the details from the general public. I would think that there’s a way to shield the profit from the public but still notify the government.