I write and teach a lot about the many benefits of using a Land Trust to hold title to real estate investments. There is a lot of misinformation in the marketplace about Land Trusts and a lot of bad advice given regarding these title-holding trusts. After using these trusts for more than 40 years, I have found that the myths outnumber the facts. In this article, I will dispel some of the myths that I hear over and over.
MYTH: Only bare land can be put into a Land Trust.
TRUTH: Any real estate (or real estate-related asset) can be titled in a Land Trust.
MYTH: My lender will not let me close my deal using a Land Trust.
TRUTH: This depends on if you are using borrowed funds from a lender that must qualify you in the secondary market. If you must meet secondary market guidelines you must indeed close the deal in your name, but you can put the property into a Land Trust the day after closing. Once you have 10 secondary market loans (the maximum allowed) you must use a portfolio lender and they will let you close using your Land Trust.
Note: Bank of America WILL let you close four secondary market loans using a Land Trust to take the initial title. However, you must use an Illinois Land Trust and the property must be in Illinois.
MYTH: Do I have to get a tax ID number for my Land Trust?
TRUTH: The answer is no. Nor do you have to register your Trust Agreement with anyone.
MYTH: You can't do a Short Sale using a Land Trust.
TRUTH: False. You can and I have and there are ... Read More…