Owning real estate is a dream for many across the United States. For most landowners, the idea of having county records list your info on searchable public platforms isn’t an issue, but some property owners might be an exception to this rule. One way to minimize access to your data and keep your name out of the public record is to place your real estate into a land trust.
In this article, we will explain what a trust is and how to sell land already held in a trust, so you can decide if it’s something that works for your real estate leads.
Let’s get started.
What is a Land Trust in Real Estate?
A simple Google search reveals three common types of land trusts, distinguished by their structure and how they operate. These land trusts are a real estate investment trust, a conservation land trust, and a community land trust.
- Real estate investment trust — This trust is managed by a trustee and works on behalf of the beneficiaries.
- A conservation land trust is a private, nonprofit entity that acquires land and easements to limit development in certain areas.
- Community land trust — Also a nonprofit, this trust works to acquire affordable housing and develop land for various purposes.
Although you might be involved in any of these land trusts, we will explain selling land held in a real estate investment trust for our purposes.
Benefits Of A Land Trust
Why do you put land in a land trust? Perhaps the most significant benefit of owning land in a land trust is anonymity. The land is recorded in public records under the land trust’s name, keeping actual owner names off the record. Famous landowners often use land trusts to keep their personal information private, and other owners use land trusts to keep their information confidential during the buying and selling process.
Another benefit of holding land in a land trust is to preserve large tracts of land for future use. This benefit can aid developers whose business it is to buy and hold on to potential development sites while going through the planning stages.
Selling Land Held in a Trust
Selling land held in a trust is often the same process as selling land that isn’t in a trust. The only difference is that the transaction’s public record will list the land trust’s name and not the landowner’s name.
Besides anonymity, another reason landowners hold property in a land trust is to protect against litigation. For owners who have tenants on their property, having the property listed in a trust can prevent unnecessary judgments brought against them. Litigation attorneys often work on contingency, so an owner who doesn’t appear to have many assets may limit their exposure to further litigation attempts.
Do You Have The Authority To Sell The Property?
If more than one owner holds the title in a land trust, then selling off the trust assets might be difficult. The trustee will negotiate on behalf of all interested parties to find an acceptable selling price. This is often done by other members of the trust buying out the other party.
Of course, if ownership of the trust is limited to one party, then there are no problems with selling off the trust assets. Sellers can use the anonymity of the trust to conduct business without fear of intrusion from outside parties.
What Happens To Property Sold From A Land Trust
As with all real estate transactions, a seller wants to get the best possible price on every deal. When a deal is made and the land is transferred from the trust to the new owner, the money is converted into a personal property trust. It holds the money in place for the beneficiaries, and everything remains in place.
As an investor, placing income property in a land trust has numerous benefits. It provides anonymity while also shielding owners from unjust litigation. This is not without its criticisms either, because some owners classified as “slumlords” use trusts to hide from public officials regarding code enforcement issues on their property.
Now that you have a basic understanding of the types of land trusts available, you will be better informed to see if a land trust works for your real estate needs.