Completing the Land Trust and Lien Document Questionnaire / Application

This is an instructional video on how to complete the land trust and lien questionnaire.

Thank you for the opportunity to serve you.

Land Trust Application Tips

Here are some things to keep in mind when completing the land trust questionnaire.

1. Name of trust

   The default name of the land trust is the street address of the property (e.g. “123 Main Street Trust”). Keep in mind, anyone can drive by and see the address. So, the address of the property is easy see. The beneficiary of the trust however, is in the trust document, itself, and not readily open to public consumption. You will generally keep the trust document in your filing cabinet at home or in a safe deposit box. Only a subpoena or similar legal action will reveal the true beneficial owner of the trust.

2. Your name and address

   We need this information so we know who we are creating the trust for, and who to send the completed document to.

3. Trustee’s name and address

   When a property is in a land trust, the trustee holds the property for the benefit of the beneficiaries. Keep in mind, the trustee does not own the property, personally. They simply hold it in their trustee capacity and must legally follow the verbiage of the trust.

   Who should the trustee be? The ideal trustee is a private LLC we establish for our clients. We typically establish such an LLC in the US state of Wyoming. This is because Wyoming has superior asset protection and privacy statutes. Plus, Wyoming has one of the lowest annual renewal filing prices in the nation.Keep in mind, if you have a lien document, the trustee of the land trust must be different from the lender on the lien document. It doesn’t make sense if the LEGAL owner of the property is lending to the LEGAL owner of the property does it? The plaintiff could easily convince the court it is a sham, invalid lien.

4. The Settlor

   The settlor of the trust is generally who owns the property now, before it goes into the trust. This can be one or more people or companies, for example.One rare exception would be if you are buying a property that you never owned previously and taking title in the name of the trust from day one. This rare exception accounts for only about one in every 200 land trusts we draft.

5. Assignment of beneficial interest

   This is used in two ways, typically. First, it is for future use if you want to assign the trust to someone else, or to a company in the future. A second reason is when we set up a separate LLC to own the trust (technically speaking, to act as the beneficiary of the trust). The land trust is a privacy tool. It is not an asset protection device. It is also not a structure to protect you if someone slips and falls on the property and sues the owner. So, we will often structure a separate LLC to act as trust beneficiary.

   One would not typically want to assign the beneficial interest in trust to a company if it is a personal residence. This is because if the beneficial owner of the trust that owns a house you live in is an LLC, it could affect your home ownership tax benefits. So, assigning beneficial interest in the trust to an LLC is for rental property, for example, not the home in which you reside.

6. Property address

   This is the address of the property that is going into the trust.

7. Property county

   This is the name of the county where the property that is going into the trust is located (Los Angeles County, Cook County, Harris County, for example).

8. To which address shall the tax bill be mailed?

   This is the address that typically appears on the upper left corner of the publicly recorded deed you use the transfer the property into the land trust. Don’t worry, the “name” in the section is typically the name of the trust, such as the “123 Main Street Trust.” So, your name will generally not appear in the tax address section of the deed.

9. Property tax parcel number

   This is also known as the Assessor’s Parcel Number. The numbering system varies by county. Here are some examples of tax parcel numbers or assessor parcel numbers:
   1742-657-428
   RPH0000027013A
   035000123456789012345.

10. Property legal description – OPTIONAL

    Some counties do, and some counties do not require legal descriptions. Typically, if your county requires a legal description, you simply attach a copy that you have photocopied to the Grant Deed, Warranty Deed or Quitclaim Deed that you will record. The legal description is very particular and any variation could cause issues. So, it is generally best to attach a photocopy, if needed rather than trying to retype it.Here are some examples of legal descriptions:

    Example 1

Lots 7, 8, and the South ½ of Lot 4, West 60 feet of South ½ of Lot 4, West 60 feet of Lot 5 and Lot 8, Block 20, OLD SURVEY, Leesville, Vernon Parish, Louisiana.

Example 2

Southwest quarter of Southwest quarter (SW ¼ of SW ¼) and West Half of Southeast quarter of Southwest quarter (W½ SE¼ SW¼) of Section Eleven (11), Township Four (4) North of Range Eight (8) West, containing sixty (60) acres of land, more or less, together with the residence, garage, barns and garden used by J. H. Kurth, Jr. for the past ten (10) years, and also the garage building now being used as a pipe storage room, but there is excepted from this sale all other buildings and improvements on said property which are expressly reserved by the vendor.

Example 3

A PARCEL OF LAND LOCATED IN THE STATE OF CA, COUNTY OF LOS ANGELES, WITH A SITUS ADDRESS OF 915 REAL ESTATE ST, LOS ANGELES CA 90010-3531 C059 CURRENTLY OWNED BY HOUSER HOMER J AND LOTS ROSE M AND HAVING A TAX ASSESSOR NUMBER OF 5090-012-034 AND BEING THE SAME PROPERTY MORE FULLY DESCRIBED AS TRACT # 8076 AND DESCRIBED IN DOCUMENT NUMBER 1020134 DATED 03/22/2003 AND RECORDED 04/14/2003.

Lien Document Application Tips

Here are some helpful hints when completing the lien document questionnaire.

1. Your name

   This is who we know who to send the document to once it is completed.

2. Your address

   Same as above

3. Lender name

   This is typically a company that we have established for you in order to serve in lender capacity. The could be a Nevis LLC or Wyoming LLC, for example. Please be sure to indicate its state or country of filing. So you will wright, “Bright Star Holdings, LLC (Nevis)” or “Blue Water Industries, LLC (Wyoming), for example.

   Keep in mind, you would not write the name of the bank that has a loan on your property, currently. This is not for existing mortgages. This is for the new lien / mortgage / deed of trust that we are creating for you.

4. Lender address

   Again, this is the address of the lender on the new lien/ mortgage / deed of trust we are creating for you. That is, it is typically the address of the LLC we are creating to serve in the lender capacity.

5. Borrower name

   This will typically be you. That is, the one who owns the property now. So, you, as the current property owner, sign promissory note and mortgage/ deed of trust. (Some states use mortgages, some states use deeds of trusts.) Then you will record the mortgage or deed of trust in the county recorder’s office (or its equivalent) in the country where the property is located. The lender holds onto the promissory note.

   If you are putting your property into land trust, you will first record the mortgage / deed of trust. Afterwards, you will record the deed transferring the property into the land trust. Why? Because generally only the property owner (or a legal order) can place a lien against a property. If you were to transfer the property into the land trust, then your trustee would have to sign the lien document. It may be difficult to convince a trustee to sign on a lien document no matter how much you try to convince them that they are not liable for the lien.

   Alternatively, let’s say you had us set up a separate LLC to act as the trustee of your land trust. If you recorded the land trust first, you would have to sign as the manager of the LLC that is holding trustee position, thus creating a crack in your privacy. So, it is generally best to sign the lien document and record it in the county recorder’s’ office. A few seconds later, you can record the deed the transfers the property into the land trust.

6. Borrower address

   Address of the borrower. That will typically be your address.

7. Amount of the promissory note for the lien we are creating

   We usually use 90% of the value for residential properties. Then we use 85% of the value for commercial properties. Okay, here is the formula. For simplicity sake, let’s say a property is worth $100,000. We take $100,000 X 90% = $90,000. If the property is free and clear, we make the lien amount $90,000. But let’s say the property has a $40,000 existing mortgage on it. We take $100,000 X 90% = $90,000. Then we take $90,000 and subtract the existing mortgage of $40,000. The answer is $50,000. So, we create the lien for $50,000. That gives $40,000 existing mortgage payable to the bank, for example. Then we add another lien for $50,000 payable to the LLC we have established for you.

   NOTE: If the loan comes under legal attack, we have a third-party lender that can purchase the loan. Then they deposit the loan proceeds into an international asset protection trust that we will (or have already created) for you. These are typically not funds you can run away and spend, as that would be too risky for the lender. (But you cannot run away and spend your dead equity down at the corner market anyway in the same way you would spend cash.) So, the proceeds are held for extra collateral for the loan. Just like now, once you sell or refinance the property through a standard bank, you can create cash that you can spend. If you want your trustee to remove the lien/loan, simply make that request of the trustee.

8. To be repaid over what period of time?

   This is typically 360 months for residential property and 240-300 months for commercial (non-residential) property.

9. Who will sign the note and mortgage or deed of trust

   This is typically you. See the above section on “Borrower name,” as this will be the same person.

10. Property address

    This is self-explanatory – it is the property address on which you are placing the lien.

11. Property county

    This is the name of the county where the property on which you are placing the lien located (Los Angeles County, Cook County, Harris County, for example).

12. To which name and address shall the tax bill be mailed?

    This is the name and address that typically appears on the upper left corner of the publicly recorded document (mortgage or deed of trust) that places the lien on the property. If your property is also in a land trust, the “name” in the section is typically the name of the trust, such as the “123 Main Street Trust.” So, your name will generally not appear in the tax address section of the deed. If the property is not in a land trust, this will generally be the name and address of the owner (such as your name and address).

13. Property tax parcel number

    This is also known as the Assessor’s Parcel Number. The numbering system varies by county. Here are some examples of tax parcel numbers or assessor parcel numbers:
    1742-657-428
    RPH0000027013A
    035000123456789012345.

14. Property legal description – OPTIONAL

Some counties do, and some counties do not require legal descriptions. Typically, if your county requires a legal description, you simply attach a copy that you have photocopied to the Grant Deed, Warranty Deed or Quitclaim Deed that you will record. The legal description is very particular and any variation could cause issues. So, it is generally best to attach a photocopy, if needed rather than trying to retype it.Here are some examples of legal descriptions:

Example 1

– Lots 7, 8, and the South ½ of Lot 4, West 60 feet of South ½ of Lot 4, West 60 feet of Lot 5 and Lot 8, Block 20, OLD SURVEY, Leesville, Vernon Parish, Louisiana.

Example 2

-Southwest quarter of Southwest quarter (SW ¼ of SW ¼) and West Half of Southeast quarter of Southwest quarter (W½ SE¼ SW¼) of Section Eleven (11), Township Four (4) North of Range Eight (8) West, containing sixty (60) acres of land, more or less, together with the residence, garage, barns and garden used by J. H. Kurth, Jr. for the past ten (10) years, and also the garage building now being used as a pipe storage room, but there is excepted from this sale all other buildings and improvements on said property which are expressly reserved by the vendor.

Example 3

-A PARCEL OF LAND LOCATED IN THE STATE OF CA, COUNTY OF LOS ANGELES, WITH A SITUS ADDRESS OF 915 REAL ESTATE ST, LOS ANGELES CA 90010-3531 C059 CURRENTLY OWNED BY HOUSER HOMER J AND LOTS ROSE M AND HAVING A TAX ASSESSOR NUMBER OF 5090-012-034 AND BEING THE SAME PROPERTY MORE FULLY DESCRIBED AS TRACT # 8076 AND DESCRIBED IN DOCUMENT NUMBER 1020134 DATED 03/22/2003 AND RECORDED 04/14/2003.