A Land Trust Is An Agreement
A Land Trust Is An Agreement
ownership of a piece of real property for the benefit of another party (the
beneficiary). Land trusts are used by nonprofit organizations to hold conservation
easements, by corporations and investment groups to compile large tracts of land,
and by individuals to keep their real estate ownership private, avoid probate and
provide several other benefits.
A community or conservation land trust is an organization established to hold land
and to administer use of the land according to the charter of the organization. A land
trust is a useful way to manage complex divisions of the Bundle of Rights that
people can own in real estate, and can be used to manage something as large and
complex as a multi-state REIT, or as common and small as a single-family home.
Corporations sometimes set up land trusts when they want to compile large tracts of
land without arousing suspicion or alerting people to their plans (which would cause
the asking price to rise). For example, the land for Walt Disney World near Orlando
Florida was put together by using many land trusts to buy smaller tracts of land.
Individuals use land trusts mainly for privacy and to avoid probate. No one knows
what one's bank balance or stock investments are, yet anyone with an internet
connection can look up a person's real estate holdings. A person who has an auto
accident or a doctor who accidentally injures a patient is a much better target for a
lawsuit if he or she owns real estate investments. So some investors buy their
properties in land trusts so their name does not appear in the public records. The
land trust also allows the property to immediately pass to their heirs at the moment
of death, rather than go through a long probate process.
Some of the other advantages of land trusts for individuals are:
1 History
2 Community land
trusts
3 Conservation land
trusts
4 See also
5 External links
[edit] History
Land trusts have been around at least since Roman times but their clearest history
is from the time of King Henry VIII in England. At that time people used land trusts to
hide their ownership of land so they would not have to serve in the military or suffer
the other burdens of land ownership. For example an elder uncle would hold his
nephew’s land so they would not have to join the king’s army. To put an end to this
King Henry in 1536 passed the Statute of Uses. The statute declares that if one
party holds land "to the use of" or in trust for another ("beneficiary"), legal title is
vested in the beneficiary. Obviously, if the statute had been given literal effect, there
would be no trust law. Shortly after the statute was enacted, however, English courts
declared that the statute only applied if the trust was passive, that is the trustee
didn’t do anything but hold the land.
In the late 19th century in Chicago some people figured out that land trusts would be
good things for buying property for investors to build skyscrapers on, and city
aldermen figured they would be a good way to hide their ownership in land since
they were forbidden to vote on city building projects when they owned land nearby.
Since the law of England including the Statute of Uses was the law of America the
question arose whether a land trust would be valid. This question went to the Illinois
Supreme Court which ruled that if a land trust was set up with some minor duty on
the trustee (such as to deed the property to the beneficiaries 20 years later), then
the trust would not be considered passive and would be valid. Thus the land trust in
America today is often called an “Illinois-type” land trust.
Land trusts have been actively used in Illinois for over a hundred years and in recent
decades have begun to be used in other states. The creation of land trusts is not a
recorded document, however the declaration of a trust is through a "deed to trustee".
Many believe that the trust is to be filed as a public document, however this removes
all of the asset protection provided by the formation of the land trust.