All Forum Posts by: Laura Richards

Mark Warda also had a book called Land Trusts for Dummies. Forms are in the back. I'm a FL attorney who has done 1000's of land trusts and even I started out reading Land Trusts for Dummies. Its great for a basic understanding and to work simple deals. 

A land trust shields each of your properties individually because each land trust is considered a separate individual entity - just like you and I separate individual entities. A creditor couldn't take @Rob Peluso's property because that creditor had a judgment against me. In the same line of reasoning, a creditor with a judgment against 123 Main Street held in Land Trust #1 couldn't take 124 High Road in Land Trust #2... Land Trust #1 is a completely separate entity from Land Trust #2.

So, you could have individual land trusts with your one LLC as beneficiary of each trust... and you need good insurance.

Many private lenders will loan and like to loan in a land trust, but the land trust should be drafted differently than a typical land trust. For example, there should be a primary beneficiary and a secondary beneficiary with the primary being the lender and the secondary being the borrower. The trust should state that the primary has complete control over the trust until all terms of the loan have been satisfied. This gives the lender a lot of protection against waste, junior encumbrances, securing and maintaining the property if borrower defaults, etc. A common misconception is that the land trust helps the lender circumvent foreclosure- it does not. 

When its time to refinance, most conventional lenders will just require that the property be deeded out of the trust at closing. 

A land trust gives you privacy, more flexibility to structure your deals, liability protection, ease of management, etc. I have a blog series on land trusts that you might find helpful www/richardslawfirm.blogspot.com. Also, join the FaceBook group Land Trusts for Investors. They are a helpful community. 

That's a very basic land trust set up. I use it on all of my investments as well. For a buy and hold with substantial equity I agree with the attorney. 

You need the trust document itself and the Deed placing the property into the trust. There are lots trust forms on the internet, but you REALLY should use an attorney for your first one to be sure everything is right, and if you start manipulating the trust in different ways to structure your deals you should consult with an attorney each time you change it around. An investor friendly real estate attorney will be able to help you.   If you screw something up with a land trust at the beginning it will really come back to bite you later. 

As for the Deed, you would name the trust as the Grantee, but remember that  a trust is just a piece of paper and therefore incapable of holding to real estate. You must appoint and entity to act as Trustee of the land trust. The trustee will act on behalf of the trust. It's also helpful to go ahead and enumerate the Trustee's powers in the deed so that you don't have people (title agents) asking you to show them the trust in order to find out if the trustee has authority to act on behalf of the trust. 

Other needed documents depend on the structure of your deal. 

Any investor friendly FL attorney should be able to help you regardless of location in Florida. We do closing all over the State, and it's never an issue. There are very few things about investing that are specific to S FL but a good attorney will know what they are. 

I agree that you should just use the FarBar contract and you don't need an attorney to get started with that. 

First, decide if/why you want to use the land trust for this particular deal. If it makes sense to use a land trust for this particular acquisition the next step is to decide who or what entity to appoint as the beneficiary of that land trust. The question of who or what entity to appoint as beneficiary is specific to the investor. If you are using IRA funds then you must appoint the IRA as the beneficiary and assign the IRA a beneficial interest that is proportionate to the amount of money the IRA is contributing towards the deal. Whether or not you appoint yourself personally or one of your LLC's as the beneficiary should be decided between you and your CPA because that is a questions of tax exposure since land trusts are just pass through entities with all profits and losses passing directly through to the beneficiary. For what it's worth, I have a lot of clients that use their IRA as the beneficiary of their land trusts.

Two things- transferring to a trust even with bene's  being current mortgagor(s) will not save you from the due on sale clause. Yes, this idea is out there and preached all over the place, but it is simply not true. Next, do not place a second lien against the property either. It is very likely that there is also a provision in the loan documents stating that you must keep the property free and clear of any encumbrance other than lenders mortgage. 

Sounds really expensive and unnecessarily complicated. A land trust should be a fairly simple process. You can have a natural person or LLC as the beneficiary - the choice between the two is one of tax liability as they are pass through entities; not civil liability. Your protection from civil liability comes from the land trust itself holding title to your real estate assets. The trusts are individual entities just like you and I are completely separate individual entities so the liability (judgment) incurred from by one trust due to a tenant issue at one rental will not bleed over and attach to your other rentals. If you are wholesaling I would recommend an LLC as a holding company, but that should be a very simple straight forward corporation formation process.