Do you Have Your Real Estate Holdings in Your Name?

Filed in archive Real Estate on January 28, 2006

Considering the huge amount of lawsuits filed every year in the United States, if you are landlord or real estate investor, you need to contemplate if you are an easy target for a lawsuit, or if your assets are easy to find. What is the question that determines this? Is the real estate you own titled in your name?

Anyone at anytime can go down to a county courthouse or recorder's office and research who the owner of a property is. Push a couple of keys on a computer and your records are instantly available.

To find out if you're someone that is worth suing, all that has to be done is to see the day the mortgage payments began, determine the balance, and then subtract it from the value of the house. Immediately the equity in your house is known. That is what determines whether you are worth suing or not.

As Bill Bronchick says, "As you can see, appearing "broke" is the best lawsuit-repellent money can buy!"

While most people know about using a corporation or limited liability company to hold title, and know that it will personally protect you, it is not sometimes known that it does not protect the property.

What is the solution?

Again, Bill Bronchick explains it this way:

"The solution for holding title to real estate is a land trust. A land trust is a revocable, living trust used to title ownership of real estate. Title to the property is held in the name of a trustee, who is forbidden to reveal the beneficial owner. The beneficial owner or "beneficiary" can be an individual, corporation or other entity for further protection. Land trusts were first used in Illinois, hence the nickname, "Illinois Land Trust." In nine states (AL, FL, GA, HI, IL, IN, ND and VA), land trusts are specifically recognized by statute. In most other states the validity of land trusts are supported by common law and general trust principles (land trusts are not recognized in TN & LA)."

"A land trust, if properly setup and implemented, will hide your name from the public records. No one will know who owns the property but you, your attorney and the trustee. If a judgment is entered against you, a lien will not automatically attach to the property, since title is not in your name."

This is a strategy that is really worth looking into. What a protection that your name will not be associated with the property title!