Do you want to buy or sell real estate properties? Using a land trust is a good idea because it protects your interests. A land trust is a legal entity that holds a title to real property in a name other than its own.
Owning real estate is an excellent way to make money. But the taxes and the fees you have to pay for it are often high. You can avoid these costs by using something called title insurance. When you own more than one property, you may have to pay these fees repeatedly as time goes on. But there is a tool that can help you reduce that cost. Read more here to find out when the best time is to set up a land trust.
There are three primary kinds of land trusts, each with its structure and way of working. These include a real estate investment trust, a conservation trust, and a community trust.
- A real estate investment trust is an organization that buys the property. The trustee, in this case, is a legal entity that works on behalf of the beneficiaries.
- A conservation trust is a private, nonprofit organization that buys the property and builds easements to stop people from developing certain areas.
- A community trust is a group of people who want to acquire low-cost housing. They buy the land and build the home, then sell it for a lower price.
Do you want to learn more about the hows and why of a land trust? Check out "The How, The Why, and The Basics of Land Trusts."
Remaining Anonymous Is One Of The Many Advantages
You might be worried about other people coming to your door to sell you something, or you don't want real estate investors contacting you--leveraging the anonymity of a land trust is ideal. You can put your property in someone else's hands.
In real estate, it can be hard to avoid sales calls from companies. To prevent this, you might want to remain anonymous so people won't find you. The trustee is not allowed to tell people your name unless a court says that they can. The anonymity will help you avoid people who might disrupt your day.
Your Property Is Protected From Liability
Being a real estate investor makes you an attractive target for lawsuits. People who want to litigate will know how much you paid for your properties and use that information to gauge your wealth. It may be that those people will use that publicly available information to take money from you by filing a lawsuit against you.
A land trust is an excellent way to keep people from finding out how much money you have. It is important to remember that a land trust will not protect you from every person, but it will help.
Prevent The Due-on-Sale Clause
When the lender chooses to sell the property, they can use the due-on-sale clause to collect the entire outstanding debt of a property holder. This clause might prevent you from making investments with the flexibility you require as a real estate investor. A land trust prevents you from having to pay the total amount due on sale.
However, this is not a rule for everyone. There are limits to it:
- commercial property
- properties with more than four residences
It's Simple To Transfer Property Ownership With A Land Trust
A land trust is when you give someone else your property. When both the grantor and beneficiary are still alive, then it is simpler to transfer. Some jurisdictions might use a land trust for tax reasons.
Should you need to change your company or break it down, it will be easier to put the land in the hands of a trust.
You Can Use A Land Trust To Sell Real Estate
There may come a time when you need to sell land held in a trust; the procedure will be the same as when selling a non-trust property. The only difference is that people will see the name of your trust instead of your given name.
When the time comes to sell your property, you need to study the trust agreement. You can sell assets of a trust if the trust agreement allows for the sale.
You will want to answer the following questions before selling with a land trust:
- Do you have the legal right to sell this property?
- What happens when a land trust sells real estate?
Do You Have The Legal Right To Sell This Property?
Sometimes there are many titleholders in a land trust, so it might be hard to sell all assets. The trustee will negotiate with other people in the trust, sometimes buying out someone else's share for an acceptable price.
However, people can't buy your property if they don't know who you are. In the case where the trust is only one person's property, then it doesn't matter, and you can sell off all your assets without anyone stopping you.
What Happens When A Land Trust Sells Real Estate?
Like any other real estate investor, a seller strives to achieve the highest possible price on each transaction.
The money is converted into a personal property trust when a transaction is completed. Then, the land is transferred from the trust to the new owner. It protects the funds for the beneficiaries while maintaining everything as it was before.
We hope this post has helped you to learn more about investing your money in land trusts. You have worked hard, and it is essential to keep your money safe. You can make sure that you keep your money safe and make a profit by investing in real estate through intelligent use of land trusts.
When you decide the time is right to use a land trust for your property investment, talk to a lawyer with experience with this kind of agreement. Finally, if you still have questions about land trusts, check out our detailed Land Trust FAQs.