Real estate investors are always looking for ways to minimize risk while maximizing profit.
One way that they can do this is to transfer title to their property from their personal name to protect themselves.
A property transfer service helps real estate investors move their properties into corporate structures (such as a Series LLC or a Land Trust) to protect assets from lawsuits and other creditors. These legal structures separate your assets and preserve your anonymity, making you look like less of a target for would-be litigants.
What Exactly Do Property Transfer Services Do?
While the process for property transfers is not incredibly elaborate, there are various steps and costs associated with transferring the title to real property. A one-stop-shop property transfer service takes care of everything you need to do to transfer your real estate, saving you time and money.
Bundling these services provides you with the convenience of only needing to find, vet, and transact with one business when securing your assets from unnecessary liability. And perhaps more importantly, these packaged services save investors money. You can always order each of the services “a la carte,” but a property transfer bundle saves money and dramatically simplifies the process.
Transferring Property Into A Series LLC/Land Trust Combo
We recommend using a Series LLC in conjunction with an anonymous Land Trust to secure maximum asset protection. When set up correctly, this combo will hide and protect your assets from potential lawsuit plaintiffs.
To pull this off, you’ll need several different services to be completed:
- Drafting a deed
- Forming an Anonymous Land Trust
- Drafting a Series Document
- Drafting a Series Operating Agreement
Drafting A Deed
First, in order to transfer property, you must have a properly drafted deed. A deed is a legal document used to transfer ownership of real property from one person to another. In this case, the deed must transfer title from your name to a Series LLC. For your Series LLC to give you the most protection possible, you must have a properly drafted deed that is correctly transferred into the Series LLC structure.
Creating A Series LLC
To have a properly drafted deed transferred into a Series LLC structure, you will need an accurately drafted and legally binding Series Document and Series Operating Agreements. Then, pairing an Anonymous Land Trust with the Series LLC stops lawsuits before they even start.
Forming an Anonymous Land Trust
An Anonymous Land Trust is a type of trust that allows you to hold title to land and other real-estate-associated assets anonymously, essentially hiding your assets. You can make the Land Trust the owner of your Series LLC, adding another layer of asset protection to your plan. To form an Anonymous Land Trust, you’ll need a properly drafted legal instrument.
Title Insurance Considerations
Title insurance is a specialized kind of insurance that protects you if there are legal issues with the title when transferring real estate. Can title insurance be transferred? The answer is yes, but only in certain situations.
When transferring property to a Series LLC structure, the most reliable method to maintain title insurance is to name a Land Trust as the beneficiary of your insurance policies. Adding your Land Trust as a beneficiary essentially guarantees that you'll get to keep your insurance.
Before transferring any property, it's definitely a good idea to review your insurance policy. Usually, when you transfer property, your hazard and title insurance expire. But if you transfer your properties into a Land Trust, you’ll be able to preserve both your hazard and title insurance.
This method is leaps and bounds better for you than getting a new insurance policy because your new insurance policy premiums would be based on the property’s current value. And thanks to appreciation, the current value will almost certainly be higher than it was when you bought it. While that's good news if you plan to sell it, it's bad news if you need to get a new insurance policy. It means you’d actually end up having to pay more—perhaps a lot more—than before. So you want to hold your policy to the last minute before being forced to renew.
Plus, if your policy isn't already near its expiration date, getting a new policy will unnecessarily cost you extra money, which certainly could be used for much more pleasant things than insurance. This is why it's worth the effort to use the Land Trust method to avoid triggering the expiration clause in the insurance contract.
Can’t I Just Do This Myself?
Every state has its own set of requirements for these documents to be legally valid, and there may even be county-level rules that apply. If a legal document is not drafted correctly, it can render even the most thoroughly planned asset protection plan ineffective. Working with a reputable property transfer service will ensure that everything goes off without a hitch.
Sure, you can find templates for these documents online, but these “free” options are rarely truly “free.” A small investment now could save everything you own later. Unless you happen to be both an experienced CPA and a licensed real estate attorney, it is unlikely that you will know all of the legal, financial, and technical requirements for creating effective and legally binding documents and entities. Don’t take that chance.
Whether you’re brand new to real estate investing or a seasoned investor with the portfolio to match, a competent property transfer service can handle the paperwork and answer your questions.