While many people find the concept of land trusts complicated or confusing, savvy investors have realized that they are effective tools with numerous advantages and limited drawbacks. Real estate attorney and best selling author — William Bronchick discusses why he encourages clients to utilize these powerful documents.
Ordinarily, a trust is a simple arrangement in which someone holds something of value for the benefit of another party. Most often a parent will endow a bank with funds for their children until they come of age. Similarly, a land trust is an agreement in which a property title is given to someone else for holding. The trustee holds legal and equitable title, while the beneficiary has the right to all proceeds, and is considered the true owner for tax purposes. In reality, the trustee’s only duties are to sign deeds and mortgages when directed to.
William Bronchick explained that a preference for privacy is the primary reason investors are opting for these arrangements. Property ownership is public record that anyone with an Internet connection can look up, but who the beneficiary of an agreement is not. For individuals or businesses that own or are buying multiple tracts, especially in a certain area, this allows them to operate discretely. Walt Disney famously used land trusts when securing the location to build Walt Disney World. If it had been known that he was the purchaser of various properties in a small area, prices would have skyrocketed. In a country obsessed with litigation, trusts can be a convenient way to avoid liens. For example, when purchasing a foreclosure property the judgment holder or the IRS can file a claim against it in the name of the seller. If the real estate is titled into a trust, any liens against the seller will not attach to the property. In addition, owners will appear “broke” to the public since their transaction history is private. This discourages contingency-based attorneys from pursuing a case, as they will assume they will not collect anything even if they did obtain a judgment.
Similar to stock in a corporation, the ownership of a land trust is assignable, meaning the beneficiary can be changed at any point. There is no need of a notary, witness or any type of public recording. The same is true for document executions, which only need to be signed by the trustee after being designated by the beneficiary.
William Bronchick is the founder of Bronchick & Associates and a nationally recognized attorney, author and speaker. In practice since 1991, Bronchick has been involved in over 3,000 real estate and business transactions. He has authored several books, including Flipping Properties, which was named one of the ten best real estate books of the year by Tribune Media, owner of the Chicago Tribune. His articles have appeared in numerous newspapers, magazines and journals, including Forbes.com, and Bronchick has appeared as an expert guest on radio and television talk shows around the nation.
William Bronchick - Founder of Bronchick & Associates, PC: http://williambronchicknews.com
William Bronchick - Explains the Colorado “Foreclosure Protection Act”: https://finance.yahoo.com/news/william-bronchick-explains-colorado-foreclosure-205200156.html
William Bronchick - Professional Profile - LinkedIn: https://www.linkedin.com/in/williambronchick
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