Almost any real estate investor knows how vital a land trust can be especially when each property can be titled in a separate land trust altogether. With privacy and protection being big benefits when using this powerful tool, here are three more reasons why you should use a land trust:
#1: Avoid Litigation
One of the biggest advantages of using a land trust is that you can protect yourselves from litigation especially since using this tool can cause you, the owner, to appear broke. Given this impression, it is less likely that lawyers will accept a case where they won’t be able to collect payments later after winning. Moreover, even if the plaintiff thinks you do have money, being unable to find and attach these assets to the case will make it even more unlikely.
#2: Privacy
In the case where you own several properties in a city where there is strict code enforcement, you can get hauled to court for every minor code violation that occurs. When you title your property using a land trust, it is not only kept away from city code enforcement but details about its ownership will also be safeguarded against prying eyes.
#3: Makes Loans Assumable
A non-assumable loan is defined as one where the owner of a mortgage will be forced to pay the full amount of the loan if their property is sold, thanks to the due-on-sale clause. However, when you use a land trust, the loan becomes assumable especially when the owner, in selling the property, transfers the benefits. Since this transfer is not registered on public record, it will not come to the attention of the lender, thus making it an assumable loan.