In recent years, many companies have developed methods that allow for Land Trusts to be used to acquire properties in foreclosure. This allows homeowners to save their homes and making it possible for investors to reap huge returns.

Some investors are under the impression that using a Land Trust will not cause Due-on-Sale clauses to force the refinancing of the subject property. This is only true when the borrower remains a beneficiary of the trust.

While the use of Land Trusts by real estate investors does make it more difficult for a lender to discover a transfer has occurred, the loan can still be called due if it is discovered. This, however, is not likely to happen as the lenders have taken back too many properties and are willing to bend a little.

A land trust is an agreement where one party (the trustee) agrees to hold ownership of a piece of real property for the benefit of another party (the beneficiary). Land trusts are used by nonprofit organizations to hold conservation easements, by corporations and investment groups to compile large tracts of land, and by individuals to keep their real estate ownership private, avoid probate and provide several other benefits.

Individuals use land trusts mainly for privacy and to avoid probate. With the Internet being such a big part of our life, it is not difficult to track assets. Any person who shows a large net worth is subject to lawsuits.

Some investors buy their properties in land trusts so their name does not appear in the public records. The land trust also allows the property to immediately pass to their heirs at the moment of death, rather than go through a long probate process.

Major advantages of land trusts for individuals are as follows:

1. Sales price of the property can be kept off the public records.

2. Property taxes are lower if the purchase price is kept private.

3. Judgments or liens against an individuals name are not a lien against their land trust property.

4. Partners can more easily continue a project if one dies or is divorced.

5. Interests can be transferred quickly without recording a deed.

6. Negotiating a purchase or sale can be easier.

7. Liability on financing can be limited to the assets of the trust.

Land trusts have been actively used in Illinois for well over a hundred years and in recent decades have begun to be used in other states. The creation of land trusts is not a recorded document, however the declaration of a trust is through a "deed to trustee". Many believe that the trust document is to be filed as a public document, however, if this is done you will lose your asset protection as your name will appear and you will be vulnerable to lawsuits as your assets will be known to the general public.

This is a wonderful tool, however, make sure you check your states regulations for land trusts and seek out the advice of an attorney.

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