How to Sell Real Estate when Investing With a Land Trust

How to Sell Real Estate when Investing With a Land Trust

– Hi, Clint Coons here with
Anderson Business Advisors and in this video we’re going to discuss selling property held in
the name of a land trust. Okay if you’ve set up a land trust and you have property that’s titled in the name of that trust, the first thing you need to look at is who is the trustee of that trust? A lot of you that are
working with me and my firm to create your land trusts may have me on your trust as a trustee or if you’re not using us
you’re using someone else and you’ve got what we refer
to as a nominee trustee. You did this for anonymity purposes. Now that works great when you’re trying to keep your information private, but it’ll work against you
when you’re going out there and trying to sell your property. Because what occurs is that when you try to sell the property the title company is going
to look to the listed trustee on that trust that appears on title as the individual who
will represent the trust and must sign on behalf of that trust. So as you can imagine,
if you’re using say Clint as your nominee trustee
and I’ve already resigned technically I’m no longer the trustee. And if you gave your resignation
to the title company, they’ll just ignore it. And I can tell you this is
from first-hand knowledge. I just actually sold a property
in Hawaii that I own there, that I put inside of a land trust and I used a nominee trustee, I mean everything that
you watch on my videos are the same strategies for the most part that I use in my own investing. And what I elected to do
was try to sell the property using my resignation or
the trustee’s resignation. So I turned over to the title company a copy of my nominee’s
trustee’s resignation appointing Clint as the
trustee of the trust. Now they received that document but they wouldn’t respect it. They said “Well, we see that
there’s a resignation here “but the only thing we’re going
to look at is what’s on title “and your nominee trustee
still shows up on title.” So then I told them, well have
you read my trust document? Because if you notice in
the trust document itself, it states that the
trustee is not authorized to do anything when it comes
to selling the property, it’s actually the beneficiary. So I can sign on behalf of
the trust as its beneficiary. Again, title came back and they said “Nope, we’re only going
to deal with the trustee “and if your nominee
trustee is listed on title “then that is the person that has to sign “but since you told us that the
nominee trustee has resigned “then in order for us to close
we have to put you on title “as the acting trustee of this trust.” So what I discovered,
and this is something that I’ve always told people and it’s an issue that I’ve
seen with other individuals who have tried to engage in
selling property out of a trust where the nominee trustee has resigned, title will have a fit over this. So what do you need to do then? If you’ve set up a land trust and you have a nominee
trustee that has resigned and you are the trustee then
you need to update title prior to selling the property. I’d update it prior to
listing the property for sale to have yourself listed as the trustee. Or if you want, you can
appoint an LLC that you set up to be your trustee just
for closing purposes. Let me just show you how that works. So if we originally set up this trust here and it had a nominee trustee, I’ll just call this NN
for nominee trustee, the nominee trustee say was Clint and then I resigned and I appointed, let’s say the individual here is Fred. Fred is the one who actually
set up Fred as trustee. So I did this after I created the trust. So as soon as the trust was set up and the property was deeded
into it I resigned my position and then Fred came on
because he’s the beneficiary, it’s his trust, he
became the acting trustee but this was not updated
with the counter recorder because we’re desiring anonymity. But now we’re trying to sell it. So when I resigned, and this is something you want to make sure you always obtain from the resigning trustee. You want to get what’s referred
to as a Trustee’s Deed. A Trustee’s Deed. And what is that? A Trustee’s Deed is a recordable document showing the change in trusteeship from your nominee trustee Clint down here to Fred as the
what I’ve always called the successor trustee. So when you have this Trustee’s Deed you keep it in your records. You don’t do anything with it,
you keep it in your records until you’re ready to do
something with the property such as sell the property
or refinance the property. Then you’ll go down and
you’ll record this deed and you’ll put your information
on now as the trustee so you can move forward
with that transaction. Otherwise, it could gum up the works. You want to do this ahead of time because let’s say what happened is you entered into a
purchase of sale agreement, now we’re past our due diligence period, the buyer’s ready to close in 15 days. Title company comes back and says oh we’ve got a problem, where’s Clint? Well Clint’s not the one
that’s going to sign on it. I am, he resigned. That’s going to require
you to ask for an extension so you can get that
Trustee’s Deed recorded to put your name up there. That’s the first problem. Second problem is in my experience with working with a
lot of title companies, they just don’t understand
business entities. And now you’ve just
thrown a curveball at them and their entire legal department and whoever else is working there, the officer that works
with the title company, they’re going to go into meltdown mode. So we want to make it nice,
simple and neat for them. So what you want to do is record that Trustee’s
Deed appointing yourself. Now another thing is if you
don’t want someone to know that you’re selling this property, you want to maintain
that anonymity shield, look at this. I resigned and I appointed
Fred as the trustee. Well Fred’s the acting trustee now, so there’s nothing to stop Fred from appointing someone else and resigning ’cause he has that power and he’s the beneficiary of this trust. So the beneficiaries
can elect someone new. So what Fred could do is set
up a Wyoming LLC down here that gives him anonymity,
or it could be Delaware. And then what Fred will
do is resign himself and appoint the Wyoming
LLC as the trustee. And again you’ll have
to do a Trustee’s Deed. So what would happen in this instance then the deed that gets recorded would show the Wyoming
Limited Liability Company as the acting trustee of the trust. You maintain the anonymity. Now here’s one thing you
would have to keep in mind. If you went through
this process like this, this deed from here to here
was from Clint to Fred. And if you want to avoid
having Fred’s name show up when you record that deed, you’ll actually have to
reappoint Clint as the trustee. So Fred would resign,
reappoint Clint as the trustee. Clint would then need to resign, issue a new Trustee Deed to the Wyoming Limited Liability Company. May be even simpler just
to set it up at the outset with the land trust itself have the LLC as the successor trustee of the trust. So when Clint resigns, he
nominates the Wyoming LLC as the successor trustee in the document. So those are ways in which you can do this in order to keep your name off title when you’re selling property. The key here though is
understanding title companies, you got to keep it in a nice
simple package for them. Don’t give them too much information because the more information
you provide them, the more likely it is that
you’re going to mess them up. One other thing I did
want to leave you with. Your title company’s going to ask for a copy of your trust agreement. If you assigned the interest to an LLC I wouldn’t provide them
with the assignment, I would just send them a
copy of the trust agreement which shows your name as the beneficiary because again they’re going
to get the assignment, they’re going to give it to the legal and the legal’s not going to
understand the land trust. And again, they’re going
to come back on you and they’re going to blow up this closing that’s going to take an
extra 30 days to close as you walk them through,
or as I like to refer to it educate them on the
purposes of this trust. My name’s Clint Coons with
Anderson Business Advisors and in this video we discuss how to sell property held in a land trust. (light music)

8 thoughts on “How to Sell Real Estate when Investing With a Land Trust

  1. Does this work in Toronto Canada?

  2. When you go to sell and you have it setup with an LLC, who/how do you sign for it? How do you prove who owns the LLC?

  3. So what's the point of anonymity if you are going to blow it at the end?
    Cover yourself while you own it?

  4. Maybe I’m oversimplifying this… but let’s say you want to form a land trust that is owned by an LLC (in FL for example) but want to avoid due on sale clause on mortgage. And let’s say that the LLC is member managed by a WY LLC that is anonymous… can’t you just make the FL LLC the Trustee with you as the beneficiary. Then assign beneficiary over to LLC after deed is recorded. Since beneficiaries are not listed on deed you can maintain anonymity. So long as you are the Manager of the WY LLC who owns the FL LLC you will be able to sign for the sale of property, maintain anonymity, and not have to keep up with so much paperwork

  5. Question: What type of LLC should the Wy entity be registered to do business as, in order for it to sign as the successor Trustee of a Trust?

  6. well done

  7. Clint: So if one has a mortgage loan, one would have to first need to establish a LT naming the mortgagee as both the trustee & beneficiary, then record it (to avoid DOS). The LT would name the WY LLC as the successor Trustee so once the LT is recorded, a Trustees Deed is subsequently recorded naming the WY LLC as the Trustee. Now seller can close without any issues with Title. Correct? Would you advise on this strategy in lieu of using a nominee individual as trustee? It seems to have less paper work this way. Thanks!

  8. Thanks Clint.

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