Anonymous Property Ownership – Part II: How Land Trusts Work

Now that you know the benefits of having an attorney prepare a land trust, it is also important to understand how land trusts work.

A land trust is an arrangement where one person (the trustee) holds both legal and equitable title to real estate and holds it for the benefit of another party (the beneficiary). Legal title indicates who is listed as the owner of the property in the official records and equitable title indicates who is really entitled to the property.

This type of trust differs from an ordinary try where the trustee holds legal title to the property but the beneficiaries hold equitable title to the property.  In most other trusts, the trust would dissolve where the legal and equitable title are held by the same person.  However, a true land trust transforms the equitable interset in the land into an interest in personal property.

A land trust is not a legal entity like a corporation or limited liability company (LLC).  It can only act through its trustee, which must be a natural person or legal entity.

Florida’s 3 Requirements for a Land Trust
A Florida land trust must fulfill three conditions that are based on Section 689.071 of the Florida Statutues.  The first two requirements are that an instrument conveys an interest in land to a trustee without naming the beneficiaries and that the trustee be given certain powers to deal with the property.  The third requirement is that there must be a written trust agreement.  Dena Rogers at the Law Offices of Dennis L. Horton, P.A. can assist you to ensure that all three requirements are fulfilled because once they are fulfilled, the trust is entitled to the benefits of the land trust statute.

While some states question the validity of land trusts, Florida is very liberal and in 2006, the Florida legislature revised, expanded, and unanimously passed the Florida Land Trust Act, so it is well established as law in Florida.  This is just one of the benefits of owning property in the Sunshine State.

In a land trust, both legal and equitable title are vested in the trustee, therefore, the beneficiary has no interest in the real property, just an interest in the trust.  This interest can be designated as personal property on the deed, which is advantageous, because personal property is legally simpler to deal with.  In this way, it is much like owning stock in a corporation that owns land.

Third parties dealing with the trustee of a land trust can rely only upon the deed and have no right to look at the trust.  The person dealing with the trustee does not have to look to the trust to see if the trustee has the right to sell the property and does not have to see whether the the beneficiares are paid.

If you would like more information on how land trusts work or the benefits of creating a land trust, please feel free to contact our office toll-free at (888) 672-4205 to schedule a free, initial consultation or send us an email and an attorney will contact you shortly.

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