Realty Land Trust

Real Estate Trust

Owning real estate is a tremendous advantage in our society. It can also be risky because your property records are public information. The internet has effectively opened the books on your property holdings. 

The County Recorder keeps a public database of all real estate records. It’s a matter of safety for the public and lenders. Anyone can view these records online or in the recorder’s office. The full legal name of any property owner is displayed. It’s often easy math to figure out your equity, or net worth.

Those who use LLCs are also exposed. Secretary of State records for your business filings are online too. All this open data leaves you slightly exposed to opportunists. Credit card theft is small time. Real estate is always where thieves go for the big money. 

Plus you have frivolous lawsuits. Many are filed every year by contingency-fee lawyers looking for an easy score. All they do is estimate the market value of your property minus any loans. Then along with their “injured” client, they try to legally steal your hard-earned equity with a lawsuit. Property owners free & clear of debt are like ripe California avocados.

Secretary of State fraud renders real property owned by LLC and Corporations at risk too. It’s a new world.

Anonymous title is much safer because of privacy. It’s your first line of defense from thieves and busybodies.

The only way to get it is by using a realty land trust for title. Quietly secure your interests.

County Recorder Profiles

Although homeowners may consider using a realty land trust for their personal residence, a family living trust is often their choice. However, if you’re a high profile or public person, you need a realty land trust on title for personal safety.

Investment property owners are at greater financial risk. Their registered LLCs leave a breadcrumb trail with the Secretary of State and the County Recorder – a virtual map to assets. Well known individuals in business, politics, or the judiciary should never use an LLC for their personal residence! Only a realty land trust gives you anonymous and privacy from anyone online searching public records.

Reduce Predator Risk

Personal and Business identity thieves as well as problem tenants can scheme to extort money from you. They’re creatures of opportunity. Even the media can cause you grief these days. Yet genuine liability can arise from personal accidents which is why you have liability insurance. If you hold real estate in your personal name, an LLC (Limited Liability Company), or even in a living trust, anyone online can easily find out the details. It’s simple math to estimate your net equity.

Crazy people want to find their targets. Maybe it’s a personal vendetta. Physical assault is real. All they do is look up your name or address at the County Recorder.

Safer Transactions

Buyers and sellers of real estate generally have successful transactions. However, there are times when a contract dispute becomes a problem. When your property is purchased in or sold by a realty land trust, you are personally and legally isolated from the transaction. This offers you a safety margin working toward any resolution.

Real Estate Agents

All professionals in the real estate industry are aware of title vesting. Yet very few know a realty land trust is best! In escrow the question about vesting is often unanswered or very casual. But nobody cares about your client’s financial or physical safety like they do. This is why title is critical.

Clients are advised to seek outside counsel by all parties assisting with the transaction. Except they’re already overloaded with issues, new faces, and under financial pressure. The thought of expending more time to seek out yet another individual for what seems like a small item, vesting, is overwhelming yet important.

A living trust is often used for a personal residence. Investors use LLCs. Both fail the test. Only a realty land trust can secure your privacy. If agents and brokers themselves were to explain these options to clients, it would result in a higher quality transaction. With privacy such an important issue these days, show your clients how to get peace of mind.

Safety From Personal Liens & Judgments

Personal financial problems such as tax liens and civil judgments will not attach to property title owned by a realty land trust. This is because the legal owner is a trustee. In a standard vesting situation, personal liens or judgments can instantly attach and thus reduce your equity. If you want to buy, hold or sell real estate without impact from your personal financial problems then use a realty land trust.

Better than an LLC

LLCs are costly, require state filings, franchise taxes, and a public record. When selling escrow requires LLC authorizations and certificate of good standing. Resident agents are easy to find by tenant’s attorneys to serve legal summons.

Frustrate nosy people and litigants by placing each property into its own realty land trust (aka “Chicago Title Land Trust”). This trust is specifically designed to hold real property. It provides legal separation from you personally and your other financial assets. It is superior for isolating your real estate with privacy.

However, an LLC and a Realty Land Trust can complement each other…

Example

One California investor had 27 rental properties and the same number of LLCs. Franchise taxes alone were $21,600 annually. Afterwards there was a one LLC and 26 realty land trusts. Net cash savings were $20,800 per year. He never looked back once.

Cash Buyers or High Equity

If you paid cash for a property and the transaction is recorded as such, that’s just like publishing your bank statement online for anyone to see. And without any mortgage lien, all your equity is exposed naked.

Imagine telling the world you own a $900,000 property free and clear!

Anything is now risky – dog bite, broken window, slip and fall. This is an easy $100,000 contingency fee case. A “lis pendens” is now recorded in first position. Your property is frozen – until you hire an attorney for resolution.

With a realty land trust, you have several options to avoid this type of surprise.

Silent Ownership Transfers

Use a realty land land trust for confidential transfers of any portion of the ownership interest without a recorded deed. For example, you can gift half shares to two heirs. Or you can quietly sell the entire interest to a buyer. There is no need to record a deed. Depending upon circumstances, this might give you an opportunity to prevent value reassessment and higher property taxes.

Proven Security

These realty trust has a 500-year history going back to English landowners in the Middle Ages. Families originally used it to safely pass property onto heirs and prevent capricious seizure by the king. Feudal society was much riskier that we have today. Or maybe not. Ownership was generally vested in multiple trustees for safety backup. You can take advantage of these trust benefits too.

“But My Lawyer…”

As valuable as these trusts are for real estate, few lawyers know how to implement correctly. It’s easier for them to suggest a living trust or an LLC. Both of them fail to keep your real estate ownership anonymous.

In the financial jungle of life – if an LLC is the hunter’s gun, a trust is animal stealth. Which comes first?


Litigation: A machine which you go into as a pig and come out of as a sausage.

– Ambrose Bierce


Realty Land Trust, Living Trust and Heirs

Most often the ideal beneficiary of a realty land trust is your living trust. Optionally it can be anyone – a specific heir, former spouse, charity or maybe a business partner. You can make changes anytime. And your property will pass without probate proceedings.

Summary

The standard method for holding title to real estate is in your personal name or an LLC. Both are failures. They leave you exposed to attack, fraud and the nosy public.

Your best solution is a realty land trust for title. It protects you because it gives you anonymity.


Trust LLC
Your Ownership is Concealed
Sales Price can Remain Secret
Quietly transfer ownership without 
recording a new deed, avoiding 
withholding and transfer tax
Equity is safe from Personal Liens 
and Civil Judgments
Properties are isolated from
 each other
When buying, you might 
retain previous owner’s tax base
Can split benefits of Capital Gains 
and Rental Income among multiple parties
Can provide protection against pending judicial foreclosure

Realty Land Trust vs LLC Comparison

Benefits of Holding Property in a Real Estate Land Trust

Do you own residential or commercial investment property? Or maybe you’re planning an acquisition or sale. If so, there are tremendous benefits for you when using a real estate trust for title. Many investors are quitting LLCs for title. Along with time and money savings, a real estate trust gives you anonymous ownership in public records. It is the safest way of holding ownership.

A quick comparison (Trusts vs LLC) of the benefits illustrate just how powerful and effective trusts are for bank account and peace of mind!


Yes

Reduced Liability

Realty Land Trust: Yes - property held in a realty land trust is legally isolated from your other assets.

Personal Title

No - you are personally liable for any and all risks on the property. All of your personal assets are exposed.

LLC

Personal liability is limited by the LLC. However, you must comply with secretary of state regulations, filings, pay fees, and franchise taxes. Any omissions can invalidate your LLC protections.
Yes

Isolates Properties

Realty Land Trust: Yes - with title in different trusts, properties are isolated from you, and from each other.

Personal Title

No - the property is connected to you personally.

LLC

Multiple properties owned by one LLC are connected. Otherwise, you create a new LLC with fees & filing for each property.
Yes

Privacy of Ownership

Realty Land Trust: Yes! There is no public record that connects your personal name to the property.

Personal Title

Your name and address are part of the public record whether or not you live in that property.

LLC

You are indirectly linked to the property because LLC manager's name listed online.
Yes

Privacy of Sales Price

Realty Land Trust: Yes! If the purchase is executed within a trust, the purchase price can kept private.

Personal Title

When you personally take title to real property, the purchase price is either calculated from the transfer tax and/or listed on the PCOR.

LLC

When you take title to real property in an LLC, the purchase price is calculated from transfer taxes or displayed in the records.
Yes

Tax Return Privacy

Realty Land Trust: Yes! Only net rental income appears on your personal tax return.

Personal Title

All income and expense plus the property itself is listed on your personal tax return.

LLC

All income and expense plus the property itself is listed on your personal tax return.
Yes

Retain Tax Base

Realty Land Trust: Yes! The seller’s tax base might be retained upon transfer if you time the paperwork right.

Personal Title

When you take title in your own name, the tax assessor will re­assess the value of the property.

LLC

Special rules apply to LLC transactions and you may not be able to retain the owner’s tax base.
Yes

Exempt from Franchise Tax

Realty Land Trust: Yes! You are exempt from paying franchise tax in California.

Personal Title

No, but you are personally exposed.

LLC

It must pay $800 franchise tax each year.
Yes

Split Gains & Losses

Realty Land Trust: Yes! You allocate them as determined by ownership percentage.

Personal Title

All income and expenses are generally allocated to you personally.

LLC

It depends upon the operating agreement.
Yes

Property Safe from You

Realty Land Trust: Yes! The property is safely and legally isolated from your personal liens and judgments.

Personal Title

Your property is at risk from your personal liens & judgments. Creditors may attach and seize your equity.

LLC

Individual LLC membership interests are at risk from seizure or levy by tax authorities or creditors.
Yes

Anonymous Title

Realty Land Trust: Yes! The County property records display an anonymous trust as the owner.

Personal Title

Your full legal name, marital status & residential address displayed for anyone to see. Includes sales price, date, loans, property tax obligation, etc.

LLC

Your LLC is easily looked up on the Secretary of State website. Risk of business identity theft and title fraud.
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