Episode Transcript
[00:00:00] I often get asked, what's the difference between an LLC and a land trust? When would I use one versus the other?
[00:00:19] I'm Joe Siegel, your real estate asset protection attorney here in Orlando, Florida. And an LLC of course is an entity that stands on its own and it is filed at Sunbiz or it's filed at some other publicly accessible database, some corporations database, depending on the state where it is filed. Now in most states like Florida, anyone can look at that database and they can see your name as the manager at least of the company. Or they can do a reverse search. On SunBiz.org, they can search for your name and see every company that you own. So you're typically not going to want your name to appear on the llc, if you can. We have ways of doing that in our law firm that we can set up your LLC in a way that no one will see your name there. However, that's a lot of anonymity. And if you have that much anonymity owning real estate, then you run into the potential problem that anyone can show up at a title company and say that they are your LLC and they are there to mortgage the property or sell the property, or they're going to put your property on Craigslist and list it for rent and they're going to break into it and put the tenant in there who is now a squatter in your property and they're going to take the money and they're going to take the rents. So you can run into a lot of problems with a little bit too much anonymity when it comes to real estate. The land trust, on the other hand, provide you with anonymity. The land, the llc, it may provide you anonymity as well, but you're going to run into some potential big, big, big problems with fraudsters who are out there. Whereas a land trust, if you get anonymity by using a third party trustee, like our company, my land trustee, then your name appears nowhere. But it's not too anonymous because anyone can find us, talk to us and say, hey, I'm dealing with so and so. Is it okay to pay rent to them? Is it okay to pay my security deposit to them, whatever it may be, and we can tell them yes or no. Is it okay to sign this contract to list the property for sale? Is it okay to sign this contract to purchase the property? Because they can find us easily. We're not anonymous. They can find us. We're the face of the property. And then we would contact you as a Beneficiary make sure it's okay. Get your instruction to go ahead and sign everything and we're good, we sign it and we're safe. And the fraud, no fraud has occurred on you taking your property without your knowledge. So those are two big differences there. Now with that said, we typically advise that if you own a multi unit property, let's say you have four, 14 apartments in a little apartment complex, or 80 or 100 or whatever, those you are typically going to want to hold in an llc because there are just lots of other reasons for that. For day to day operations there's a lot more documentation being signed every single day. You may have four or five leases being signed four or five times a week.
[00:03:11] At the end of the month you're having to do move out reports. There's just a lot of moving parts. So you, you need that ability to day to day sign those documents very, very quickly because there's just so many of them. So a third party trustee may not work best for a very, what we consider complicated property, like a multi unit apartment complex. But just about every other property you can definitely hold inside of a land trust and then you can have your LLC that acts as the beneficiary. The other thing this does is you can have one LLC rather than multiple LLCs owning multiple properties or having to form a, a separate LLC for each or having one, worst case scenario, one LLC owning multiple properties, you definitely never want to do that. But the land trusts are easier, faster and simpler to set up than an llc. The tax is handled as far as it's just a pass through disregarded entity, sort of like a single member LLC is handled so it doesn't affect your taxes. And also you can sell the beneficial interest in the land trust a lot easier than selling the membership interest in the LLC should you ever decide to transfer the property by selling the beneficial interest rather than selling the membership interest in an LLC or selling the property. So it just provides a lot more privacy than the LLC does. It also provides that cheaper, faster, easier way to segregate the liabilities of all the properties, all your properties that you own from each other and away from you than an LLC does. And it just provides that extra layer of protection that you, you don't look like you own a lot of properties. If anybody looks up your name, they're not going to see all these properties you own. If you own all your properties in llc, they're going to look up your name, they're going to see all the LLCs you own, they're going to look up the LLC is they're going to see what they own and they're going to go, haha, this person owns all these properties. We are definitely going to sue them because they're a deep pocket. Whereas if it's us as the trustee that owns the property, they may look up who owns the property. They're going to find us. They're going to see, yes, they're trustee of thousands of properties across the state, but they're simply trustee, they are not the owner owner of these properties. So it does no good. And they realize, oh well, we can only go against that property. If they look up your name, you happen to be the beneficiary or your LLC happens to be the beneficiary and they look up that name, they're going to see that it doesn't own anything. They're not going to find anything that it owns in the state of Florida. So that's another reason you definitely want to do the land trust for those types of properties. If you've got any other questions, feel free to go to our website mylandtrustd.com or give us a ring or drop us an email at helloyland Trustee Doc and we'll get back to you. Usually the same business day or the next business day at the latest.
[00:05:47] Thanks for listening to this edition of Trust this. If you got something out of it, please press like and subscribe and give us a five star review to help us reach others who can benefit from this series. Until next time, keep aspiring to a better life.
