How Does It Work?
A land trust is established through a two-step process. First, the beneficiary or beneficiaries must complete and sign the land trust agreement. Under the agreement, the owner, or beneficiary, names Company Name as the organization that will serve as trustee. Second, a deed in trust, transferring the property from the current owner to the trust, must be completed and recorded with the appropriate County Recorder of Deeds Office.
Land Trust Key Facts
Any person or entity that is capable of entering into a contract may establish a land trust– an individual, a group of individuals, a partnership, joint venture, corporation, or limited liability company; or a personal trust.
Under a land trust agreement, the beneficiary retains complete control of the real estate in the same manner as if the recorded deed were in his or her name. The beneficiary may terminate the trust whenever desired and may add additional property to the trust at any time.
The trustee executes deeds and mortgages and deals with the property only when directed in writing by the beneficiary.
When title to real estate is held in a land trust, the interest of the beneficiary, under the terms of the trust agreement, is personal property. Since the beneficiary’s interest is personal property, he or she may transfer it by assigning that interest without the formality of executing and acknowledging a deed.
The beneficiary of a land trust changes his or her interest in the property from real estate (title to property) to personal property (ownership of the beneficial interest). Even though the beneficiary retains complete management and control over the property itself, he or she is not burdened with many of the legal characteristics of real estate when dealing with the property. Since the beneficial interest is considered to be personal property, it is treated in much the same manner as a car, bank account, or other tangible property. Consequently, the beneficial interest can be sold, pledged or assigned in a simpler fashion than a conveyance of realty.
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