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Wallace
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Land Trust for CA property
Sunday, January 03 2010 02:03 PM
I'm still really new at this, just having studied the basic and advanced course. I am in the process of buying a multifamily property in California. I live in California. Should I use the Chicago-type or Virginia land trust to hold title to this property? Or, should I simply use a Calif. Land Trust to hold title in Calif? Are there Calif Trust laws (or lack thereof) that make it unattractive to hold title to property domiciled there?
I understand that using another State's trust laws (like VA and IL) for holding title is great to take advantage of that state's superior trust law and case history. Not to mention the confusion it'll cause lawyers trying to find and sue you if the property is domiciled in another state. I was just curious if CA had any caveats in their trust laws (i.e. disclosure of beneficiaries for code violations, sale, etc) since I live here, I figure it's good to know.
Thanks!
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Randy Hughes
Master Advisor-39 years of experience
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Re:Land Trust for CA property
Sunday, January 03 2010 05:39 PM
Wallace,
PLEASE SEE MY COMMENTS BELOW IN BOLD.
RANDY
I'm still really new at this, just having studied the basic and advanced course. I am in the process of buying a multifamily property in California. I live in California. Should I use the Chicago-type or Virginia land trust to hold title to this property? Or, should I simply use a Calif. Land Trust to hold title in Calif? SINCE YOU ARE JUST GETTING YOUR FEET WET WITH LAND TRUSTS YOU MIGHT CONSIDER JUST USING A CALIFORNIA LAND TRUST. CA TRUST LAWS ARE NOT THE BEST BUT THEY WILL DO UNTIL YOU GET MORE COMFORTABLE WITH THE USAGE OF LAND TRUSTS.
Are there Calif Trust laws (or lack thereof) that make it unattractive to hold title to property domiciled there? NOT NECESSARILY...IT IS JUST THAT USING AN OUT OF STATE TRUST IS ALWAYS BETTER FROM A PRIVACY AND ASSET PROTECTION STANDPOINT.
I understand that using another State's trust laws (like VA and IL) for holding title is great to take advantage of that state's superior trust law and case history. Not to mention the confusion it'll cause lawyers trying to find and sue you if the property is domiciled in another state. I was just curious if CA had any caveats in their trust laws (i.e. disclosure of beneficiaries for code violations, sale, etc) since I live here, I figure it's good to know.
HERE IS WHAT WE KNOW ABOUT CA TRUST LAW. YOU MIGHT FOLLOW THE CITATIONS MENTIONED BELOW FOR ADDITIONAL INFORMATION.
California does not have a specific Land Trust Statute. Trusts of real or personal property or both may be created, subject to rules as to alienation, vesting, etc., and subject to the Statute of Frauds (Prob. C. 15206), for any purpose that is not illegal or against public policy (Prob. C. 15203). Common law of trusts, as modified by statute is the law governing trusts. (Prob. C. 15002). The Trustee can be an individual, or bank, or trust company qualified to conduct trust business in California. (Finan. C. 1500-02). Basically, California case law follows Illinois law in allowing passive (or dry) trusts (i.e. Land Trusts). Land Trusts cannot be deemed “passive” or “dry” because their Trustees DO have duties to perform (such as signing deeds, loan documents, attending closings or escrows, etc.). In fact, under Restatement (Second) Trusts, 69 (1959) the majority view in the United States is that a duty on the part of the Trustee to convey the trust corpus – and nothing more – is sufficient to avoid the trust being classified at law as a passive or dry trust.
NOTE: In January 2009 California passed a new law regarding the Trustees and their necessary qualifications. The gist of the legislation is that a Trustee must have three years of experience and certain bonding requirements UNLESS they are an attorney or are the Trustee of three or fewer trusts.
Randy Hughes
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Wallace
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Re:Re:Land Trust for CA property
Sunday, January 03 2010 08:30 PM
Hi Randy,
Thanks for the reply. Based upon your last paragraph, forming a CA land trust would be more difficult now that the trustee needs to have 3 years experience or a lawyer. I was going to use my brother-in-law. Is CA the only state with this new requirement? Does this requirement affect the successor trustees?
I could theoretically use a CA attorney as a trustee, and then a year later switch the trustee to my brother-in-law who has no trustee experience.
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Randy Hughes
Master Advisor-39 years of experience
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Re:Re:Re:Land Trust for CA property
Sunday, January 03 2010 10:06 PM
Wallace,
Did you notice in the new trustee requirements that anyone can be a trustee for three or fewer trusts without the new requirements affecting them? I do not know how many trusts you need but your brother in law could be trustee on three trusts for you.
Randy Hughes
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Wallace
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Re:Re:Re:Re:Land Trust for CA property
Saturday, January 09 2010 02:09 PM
Where do I go to read about my state's trust laws?
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Randy Hughes
Master Advisor-39 years of experience
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Re:Re:Re:Re:Re:Land Trust for CA property
Saturday, January 09 2010 02:21 PM
Wallace
SEE MY COMMENT BELOW.
Where do I go to read about my state's trust laws?
GO TO THIS LINK:
http://www.realestateforprofit.com/StateLandTrustLaws.aspx
AND CLICK ON YOUR STATE
Randy Hughes
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