There are nearly 100 million lawsuits filed every year in the United States. Landlords are probably the single most sued classification because of the misconception that all landlords are RICH! Another reason why landlords are such an easy target is the fact that it is so easy to find out what they own. If you were going to sue someone, wouldn't it make sense to investigate the potential assets of the person you are going to sue first?

Most landlords/property owners walk around with a big target on their back because almost all of their hard assets can be discovered by a simple computer search of the local county records. You (or your attorney) do not even have to leave the comfort of your home or office to find out every piece of property that a landlord owns. Why? Because most landlords/property owners hold title to their assets in the own personal names! This is like walking around with a financial statement imprinted on the back of your shirt! Once your assets are known it is not hard to estimate the lawsuit satisfying equity.

Let us take an example of why you should NOT hold title to real property in your name or jointly with others. Case-in-point:

A few years ago I sold out of a real estate investment and took a note back for part of the proceeds. The buyer defaulted on the note and I took him to court. After winning a judgment against the buyer I recorded a "memorandum of judgment" in the county where I knew he owned property (how do you think I found out what he owned?). The memorandum filing was like putting a blanket over everything he owned in his name or with others. He could not make a move without dealing with me first.

As luck (mine not his) would have it, I received a call from a local title insurance company that was trying to close the sale of a property. The problem was that my judgment was a "cloud on the title." As it turned out, the man I had a judgment against owned a property jointly with his daughter. The daughter was trying to sell but could not because of her dad's judgment to me.

After some conversation, I agreed to release my judgment (on that property only) in exchange for ALL of the daughter's equity. This allowed the sale to go through but did not provide any equity to the daughter. I suspect that dad and daughter had a very uncomfortable conversation after closing.

The point here is that if the dad had just put all of his (and his daughter's) real estate holdings into separate land trusts, it would have allowed the sale to go through without my knowledge!
This example is just one of a huge number of reasons to use a land trusts in all that you do with real property.

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