Finding An Attorney Who Knows About Land Trusts

Why Drive a Jalopy When You can Have a Mercedes Benz?

An Introduction The Uniqueness Of The NARS Equity Holding Transfer System™

by Bill Gatten



A caution to always seek out the advice of a competent attorney before "trying this at home" is definitely good advice: but I find it difficult to proffer truly good (non-legal) advice on the subject of seeking the right attorney with regard to the NEHTrust(tm) System, or even land trusts in general. In fact, I find myself "...a tad 'twixt a rock and a hard place" here (as it were), mostly because... they jest ain't hardly no sech’a lawyer a'tall around these parts (as one might be wont to say on ‘Jerry Springer’).



For the record, however, I certainly do not advocate proceeding in any real estate related transaction without the advice of a "good' and "knowledgeable" real estate professional. Buyt the quandary in which I find myself is that there are very few attorneys who are both (good and smart), much less who know anything about the use of trusts in general. There is also that nagging fact that there are even fewer who know kidney beans from kick boxing about what a "land trust" is...much less what is does, or how it differs from other living (inter vivos) trusts. Many attorneys have never even heard of such a thing; and there are even fewer yet who are competent to offer sound advice, yeah or nay, relative to the use or safety of an "Illinois-type, revocable, inter vivos, title-holding, beneficiary-directed, third-party trustee, land trust transfer (i.e., the NEHTrust System™)."

Ordinarily, when an uninitiated attorney is engaged for the purposes of reviewing a land trust transfer-much less a NEHTrust Transfer(tm) with all of its attendant appendices, directions, Escrow documentation, creditor letters, etc., he or she is faced with a true pointy-horned dilemma. The only two options available are:



1) Get into Nexus-Lexus or out to the law library and spend billable hours getting educated on the advent and history of land trusts, or



2) Render advice (pro or con) on something they know virtually nothing about (and it will always be 'con,’ I can assure you…because ‘con’ is quicker, easier and cheaper than ‘pro’).



I'd presume no less than 10 or 20 hours would be needed to thoroughly research the pertinent local and federal codes and cites, and the myriad features, benefits and uses of the land trust (i.e., a bill of from $1,700 to $ $5,000); Think about it...if you were a busy attorney whose itinerary was over-burdened with money-making time constraints, what would you prefer to do? Would you opt to:



1) Spend your "billable" hours doing hard research for free for a transaction you'll probably never see the likes of again;



2) Risk your client's walking away, and your receiving nothing for your consulting time, or



3) might you attempt to convert the entire transaction to something else: something you better understand, and are more competent to advocate...and something on which you could make some money, despite its relative negatives?



Similarly, if you were the client seeking and hoping to pay only for a simple review and approval of a set of documents, would you be willing to finance your attorney's continuing legal education at the rate of $275 to $375 (or ?) per-hour? Me neither.



My hope is that you’d refuse to relent, as many do, and not be coerced into accepting that the entire transaction should be transformed into something more "manageable (for the attorney)." Perhaps a nice "Contract for Deed" or maybe a little (innocuous, due-on-sale violating) lease option. After all, let's face it, there just isn't much billing potential in telling a client, "I'm not competent to advise you in this matter...you should see someone else."



When a client does take the attorney’s advice to "convert to something else," doing so clearly means reverting back to the very downsides, short falls and serious risks that the NARS NEHTrust Transfer™ is designed to avoid and protect us from in the first place. Shortfalls and risks such as the lenders' due-on-sale clause violation; the risk of a resident's claim of "equity" to forestall eviction and force judicial foreclosure (to buy time and free rent); the constant threat of your seller's or buyer's creditor and/or tax lien judgments attaching to the property (or to the option on it); the insidious susceptibility to partition actions and/or charging orders against individual participants by judgment creditors; risk of involvement in the other party's Probate or forced ancillary administration issues; recordation and public notification of the transaction; absence of a third-party holding entity to ameliorate potential for disputes...to name just a few.



If you or I were to consult with a licensed, board certified medical practitioner about treatment for a brain tumor, a good one would refer us to a neurologist. However, the mindset of the legal practitioner is all too often analogous to the physician's suggesting that we simply contract a more manageable disease. "I missed the class on brains, so how 'bout I treat you for hemorrhoids instead? Here Pay me. Insert this someplace special and call me in the morning. And if this doesn't work...great, just let me know, and we'll switch to another disease which I won’t be able to cure either, but which will keep you coming back for treatment…and paying me. Unless of course you die, in which event we will at least have done our best…right?"



“So,” you ask, "But…but…what are you trying to say, Billl? Should I seek the advice of an attorney or not?"



Yup you sure should! Indubitably as a matter-of-fact (so say I)! However, do be sure to choose a truly competent one who has experience with land trust transfers in creative real estate transactions. And if they start talking about Lease Options, Lease Purchases, Land Contracts (Contracts for Deed), Wrap-Around Mortgages, Equity Shares, Subject-To's or ‘Silent Seconds’ as an alternative...run for your life! Unless, of course the attorney is your brother-in-law...in which event it will be you who is facing the dilemma, and who likely should run for your life anyway, irrespective of what he says.



But, Bill, are there any attorneys anywhere that you could recommend?



Thanks for asking, but, NO, there are none.



However, there are a few nice people with whom I've become familiar over the years who do practice law and who do understand the concept (albeit a limited few, to be sure…though this list is by no means complete). I cannot vouch for any of them (learned the hard why one should never “vouch”), but I can list their names (addresses and phone numbers are up to you):



AZ, Gareth Hyndman, Phoenix/Scottsdale

AZ, Harvey Dye, Phoenix Scottsdale

CA Steven Zipperman, Santa Ana

CA, David Robinson, Los Angeles

CA, Gary Gitlen, Agoura Hills

CA, Jay Swob, San Diego

CA, John Brady, San Diego

CA, Judy Wrentschler, Foster City

CA, Mark Blankenship, Riverside

CA, Martin Slater, Los Angeles

CA, Michael Kilmartin, Simi Valley

CA, Paul De Witt, Los Angeles

CA, Peter Gibbons, Riverside

CO, Bill Bronchik, Denver

FL, Mark Warda, Ft. Lauderdale

ILL, Henry W. Keno, Chicago (but alas…he died)

ILL, Doug Lansky, Downers Grove

MA, Birnbaum and Monahan, L.Q.

MA, Michael Moskos, Worcestor, Mass

MD, Bryon S. Bereano, Upper Marlboro

ME, Jennifer H. Pincus, Portland

MI, Jean Marie Hansen, Detroit

MI, Russell Messina, West Bloomfield

MO, Richard L. Zinn, Kansas City

NC, Clinton S. Forbis Jr., Kannapolis

NC, Susan Hunt, Greensboro

NJ, John H. Crammond, Bloomingdale

NY, James De Brosse, Queens Village

NY, John Freeman, Manhattan

NY, Nabisubi (“Nobi”) Musoke, New York City

NY, Steve Butcher, Rochester

OK, David Eldridge, Oklahoma City,

TX, Blue Ransfeld, Fortworth

TX, Bryan Dunklin, Dallas

TX, Jerry Corbin, Midland

TX, Theresa Smith, San Antonio

TX, John C. Blazier, Austin, Texas



The following are some attorney quotes, in answer to: "Why aren't there more attorneys to call on who know something about land trusts?



"Because very few know how to use them and even fewer recognize the benefits."

Mark Warda, Attorney, Florida



"If you can't find the expertise [when seeking a competent attorney], you have no choices but to keep on looking, or take upon yourself the task of trying to educate your advisors and counselors."

Jay Douglas Swob, Attorney, Cincinatti



"Another problem with using attorneys is that most have a negative attitude. They will probably advise against using a land trust because they [themselves] don't understand it."

Bill Bronchik, Attorney, Denver



"In that the 'land trust' is less frequently used outside of Illinois where it was first created [1920 its precursor in 1891], it is unlikely that many will be immediately familiar with its benefits or structure."

Henry W. Kenoe, Attorney, Chicago (Deceased) (Keno on Land Trusts, IICLE, 1989)



"No! Don't do it! Oh m'god! These can only be done in Illinois. They violate the Doctrine of Stepped Transactions. Lease tenants can't take tax write-offs. You crazy? No court in the country would see such a thing as a conversion of real estate to personal property! Run Gertrude, run! Run like the wind!”



“But wait. Before you rush off, Gertrude, let me create an all-inclusive wrap-around mortgage for you instead. It'll do the all the same things and I'll only charge you $2,000." The Due-on-Sale Clause? Oh, don't worry about that...lenders never pay any attention to those things. I'll build in a nice exculpatory paragraph anyway (so you can't sue me) and it'll be in bold print. Could the buyer get the property embroiled in a lawsuit or tax lien while you're still on the mortgage loan and unable to make the payments or sell the property? Well, I suppose so, but that hardly ever happens either...don't worry about it. Could you evict the buyer if he doesn't make his payment? Well, no. But, hey, there's always judicial foreclosure, Unlawful Detainer, Ejectment and quiet-tile action: which I will be more than happy to handle for you (at $225 per hour plus court costs...no guarantees of course).



“Huh?



"Would the property be tied up in the other party's Probate proceedings, if they die?" Well, um, yes, but most people don't ever die of anything serious: but even if they did, that would just be a matter of another paycheck for me, now wouldn't it? I don't see any problems here."

Unnamed, famous, anonymous former attorney, Riverside, Ca.



"There is no person on the planet that is more apparently knowledgeable about the law relative to anything new, than a lawyer who doesn't know what the hell he's talking about.”

Bill Gatten, Author, Entrepreneur,

Seminar Leader, West Hills, Ca.



If your, or your client’s, attorney tries to put one over on you by suggesting tht the client do something else via another type of transfer vehicle, he/she would only do that if they were too busy, too lazy or too misinformed to tke the time to justify their opinions. Should this happen, just ask him/her (the attorney) if he/she will sign an agreement declaring that the suggested alternative will do everything the NEHTrust can do.



In other words, will the suggested alternative serve to avoid –



…a due-on-sale (DOSC) violation

…the need for option fees and/or rent-credits (that create “equity” violating the DOSC)

…the ability of any party to it to act unilaterally (alone, without the other party/ies)

…any untoward, illegal or deceitful actions of another party to the transaction

…the potential for any party creating clouds on title

…the ability of any party to over-encumber the property

…the need for foreclosure and ejectment action re. eviction

…the tenant’s worries about the actions of the landlord/optionor

…the misdirection or embezzlement of funds (pmts, taxes, ins., etc.) by any party

…partition or charging orders by outside creditors (even the IRS)

…the need for deceit and subterfuge (re. an underlying lender’s admonitions)

Or can the suggested alternative provide –



…avoidance of the “due-on-sale” clause (options, wraps, land contracts & equity shares certainly do not)

…free, centralized 3rd-party professional collections and disbursement of paymnts

…automatic notice of default to all parties

…legitimate recordation in the name of another (without due-on-sale threat or loss of control)

…full income tax benefit to the acquiring party throughout term of the agreement

…quick and easy eviction without risking claims of “Equity” to force foreclosure and stall ejectment

…higher rental income for the landlord (re. transfer of tax benefits)

…lower after-tax housing cost for the tenant (re. access to tax benefits)

…the safest and most silent contingency sale vehicle ever

…easiest purchase and disposition of property at termination

…transfer of full ownership benefits without equity transfer

…privacy of ownership without compromise or public notice

…24-hour monitoring of all aspects of the transaction

…freedom from all management, maintenance and collections

…avoidance of credit damage and debt-relief taxation (re. foreclosure or short-sale)

…a history of never having been challenged in court or by the IRS



NOTE: In order to accomplish all of the above, one need but (with the proper documentation) vest the property in a land trust and make the tenant a co-beneficiary. [See Title 12 USC 1701-j-3; Title 12 US CFR(a) 591(vi); Rev. Rul. 92-105; IRS Sec. 163(h)4(D)]



ANOTHER NOTE: Bill Gatten, the author of this article, is not engaged in the practice of law, or in rendering dependable professional advice of any kind what so ever. For legal or other expert assistance and direction, the services of a competent professional should be obtained. Do not expect Bill Gatten to know anything about anything...ever.



STILL ANOTHER NOTE: Want to get your attorney to do the right thing? Give them a copy of this article. If they review the above list and tell you they don’t agree that these benefits are attainable, it’s because they simply don’t know anything about land trusts, much less what can be done with them, and choose not to learn.



The attorney’s creed: I’ve been to Know it All School, so If I don’t know it by now, it is either unknowable or wholly without merit.



Bill J. Gatten

No. American Relty Services, Inc

Bill Gatten Seminars