All Forum Posts by: Edward Schenkel

@ Eddie T.

My opinion about the land trust and LLC structure is that it is a good way to preserve anonymity. Essentially, you set up the LLC and the trust is the sole member of the LLC. I have set this structure up for clients in the past but a couple things to keep in mind. First, you need to make sure that in your state you do not have to file the trust document anywhere like the land records or secretary of state when you set this structure up. In Connecticut, you do not. All you need to do is list the name of the Trust on the LLC incorporating document and that is sufficient.

Second, you cannot set up a trust where you alone are the settlor (creator of the trust), the trustee, AND the beneficiary. Therefore, you will need to have trusted people serve as the settlor and trustee and you can be the beneficiary (or you can be the settlor and a trusted family member or friend can be the beneficiary). Message me for any specific questions about setting up the trust.

So, if you set it up properly, the LLC holds title to the property and if anyone went to research the member of the LLC at the secretary of the state's office, they would only find the name of the trust and nothing else. Your anonymity would be preserved.

Please check with the secretary of the state of your state to confirm this. This is the case for Connecticut and other states. Also, in some states you may have to record the trust document, but in most you do not. So you need to check these things out before you do it in your state (again, I only practice in CT and a little bit in NY).

The answer to the second question re the title company check - I am not sure. You would have to call the title company.

@

Your question is whether I have purchased real estate for clients abroad using a trust and or Power of Attorney (POA = Power of attorney for those not familiar with legalise). The answer is I have only once encountered closing by POA for a client who was abroad, but a bank was not used. Here is a valuable bit of information for the forum about power of attorney in another country - If you are executing a power of attorney in a foreign country, it must comply with that country's laws regarding power of attorney. It does not matter if it only complies with your state's laws. For example, if I wanted to close by power of attorney for a client in France, he would need to execute a power of attorney that complied with France's laws (and Connecticut law). That is the only way it would be valid. He would then have to get me the original power of attorney to record. Similarly, if you are signing a power of attorney in California to close a deal in CT, the power of attorney must comply with CA law.

The answer to your question is I have only closed deals for clients abroad by POA with no bank involved. If the bank is involved, the bank must approve closing by power of attorney for a client who is abroad. I hope I read your question correctly; if I did not, let me know. If I did not, I think at least this response added some value about power of attorneys for the BP community!

@ Sal Morello, thank you. I have litigated leases before so I know the good stuff to get in there! I will add some more tips about leases in future posts.

@ Corbin M. I have seen leases for tenants in multi family homes that do not adequately describe the leased space and do not mention the areas such as stairways, decks, patios, lawn etc. When you describe the leased premises, it is important to be specific in describing the leased space and whether the leased premises includes the stairways, patios, decks, etc. This will leave no ambiguity whose responsibility it is to maintain. So for example, if the lease does not mention the back stairway at all, and someone tripped and was seriously injured on the back stairway, the Tenant or the injured party would have a much easier time blaming the landlord. However, if the leased premises was clear that it included the back stairway, the landlord would have some arguments that he or she is not responsible (premises liability law can be complicated, but this type of lease provision can help you).

You should also be clear in the lease that the tenants have equal and shared rights to the yards and driveways so you will not have any problems in the future with the first floor tenant arguing that he or she has greater rights to the lawn than the second floor tenant. You should also make it clear whether the tenants have rights to use the attic for storage, etc. This will prevent future problems. 

This is my tip of the day. Let me know whether you think this is helpful!

Regards,

Ed

I have a tip for leases involving multi-family properties, anyone interested in hearing it?

@ Eddie T. Quick questions for you so I understand. First, where is the property. Second, what is the purpose of setting it up like this? Tax benefit? Insulate you from liability? Advice from counsel? Other?

@ William Joseph, the appeals generally stays the sale with very few exceptions. For example, a party can move the court to remove the stay and allow the sale to go forward. If there is a valid appeal and the stay is in place, the Committee should not hold the auction. Is the committee still going to hold the auction? What is the docket number of the case, I can look it up.

Ed

@ Pat Alford, good question. I get asked this question sometimes and to tell you the truth, this is more of an accounting question than a legal question. Different types of legal entities have different tax consequences. Typically, accountants advise my clients to set up a LLC (and file as a S corp) as the real estate holding company opposed to setting up a corporation (ex XYZ, Inc.). But again, check with your accountant. Your accountant may have different advice based on the property you seeking to invest in.

The legal end of this I can answer. Whether you set it up as a LLC, Corp, etc. you are shielded from liability the same if you are sued. In other words, a LLC v. a Corporation doesn't give you any additional protection. However, several things to also be aware of. First, your state may have different laws in terms of who can be members of the different type of entities. For example, in Connecticut there are some restrictions on whether a Trust can be a member of certain types of entities. This really only matters if you have a lot of investors and perhaps have some unusual investors investing through trusts.

The more important thing in terms of mitigating liability is that most investors who have multiple properties typically have a different holding company for each property as opposed to one company owning all the properties. That will limit your exposure. For example, if someone slipped and fell in one property that had its own holding company, they couldn't go after your other properties if they are held in separate companies, The accounting administrative cost could be burdensome if you have many properties so it is another factor to consider if you want to create a lot of holding companies so sometimes it becomes a mitigating risk v. admin cost analysis. 

Does this help?

Ed

Hey all, I am relatively new to the group. I am very impressed with the experienced professionals here and am glad that I stumbled upon this site.  I am a seasoned real estate attorney and enjoy not only practicing law but teaching about real estate law. I would be happy to answer any legal questions anyone has about Connecticut real estate.

Regards,

Ed Schenkel

@Lisa Pacowta,

I would perhaps contact some real estate agents. Some of them manage properties part time as well. That could be a good avenue. I also know some good management companies in southern, ct. I am not sure what they charge though. Message me if you would like their contact info.

Ed