Land Trust Question # 502
Ok just kidding it probably isn't 502 but here it is. If I put my rental properties into a land trust, tustee to be named LLC as Ben, then I put the insurance in mine, the LLC and lenders name. Is that correct? next lets say I do get sued or rather the LLC gets sued. Lets also say that they win the lawsuit and I lose all of my property. ..What happens to the mortgages that are still in my name? if the property getrs sold to pay the debt, am I going to be on the hook for the difference between what I owe and what they get sold for? how does that exactly work?
Thanks
Joe Mendez
PS- I still advocate sticky threads that encompass all the major topics- Land trusts, LLC vs Corp, that sort of thing
If the property is placed in trust the new owner is the Trust and the insurance should be in the name of the owner and the lender(s) who hold a mortgage interest in the property.
The LLC is not the property holder but the trustee who manages the subject property on behalf of the trust and those who have a beneficiary interest in the subject property.
Since you and the LLC do not own the property you can not loose a property that you do not own, but they could if successful place a claim on any beneficiary interest you may have.
[addsig]
Ok so if the land trust is "123 Land Trust" Then the owner is 123 land trsut and the insurance would be in the name of 123 land trust and the lender?
This is correct! The property is insured on behalf of the property owner and the mortgage lender.
I have found that insuring a home in a trust can be a little difficult at times but a builders risk policy for me has been easier to obtain although the cost has been higher.
If a property is taken by a subject to method of investing and placed into a trust it is best to state in the beneficiary agreement who gets what as the beneficiary agreement is the guide for the trustee who gets what out of the sale or any profits.
JohnMichael,
You stated that neither the LLC nor the responder (Joe) would be the owner of the property.
My question is that when setting up a land trust, wouldn't you want to make yourself the beneficiary of that trust? How do you continue to enjoy the benefits of the real estate ownership if you no longer own the property?
Thanks in advance,
JS.
you indirectly own the property because you are the beneficiary of the trust
Actually, I had the same questions, and I was wondering if anyone had the answer to the second half of Joe's question.
If the property belongs to my land trust, land trust gets sued and loses the house, but the mortgage is in my name, what happens?
Thanks in advance!
Alison Hwang
If the property is transferred to a trust in which Joe is the grantor/creator, whereby Joe's LLC is the trustee and Joe is the beneficiary.....that is NOT a change of ownership. It is merely a change in the manner in which title is held. That is why a transfer to a trust in the above manner does not trigger the Due-on-Sale clause. Liability insurance may be held either in the name of the trust, the trustee or the beneficiary so long as the beneficiary(Joe) and the lender are the insured.
SmithJ2:
You asked: <quote>"How do you continue to enjoy the benefits of the real estate ownership if you no longer own the property?"</quote>
Easy - Just OWN a % of the TRUST That Now OWNS the Property.
You can still KEEP (and/or re-SELL) the following:
1- Use & Occupy (lease option it out for Cash Flow)
2 - Tax Benes. (mortg. Int. deduc. & Prop. Asmnts)
3 - Equity Build Up (from retiring Principle balance)
and
4 - Appreciation (if any)
I could post about 36 MORE Reasons here if you'd like?
Hope this helps!
Derrick Ali :-D