REI Wealth Magazine Featuring Paul Finck | Page 50
T
here is no federal land trust law. Each state
either has a Land Trust Statute or trust laws that
govern the validity of using a Land Trust to
hold title to real estate. In past articles I have covered;
Florida, Virginia and California. This issue of my
Land Trust University newsletter will detail the Illinois
Land Trust (Chapter 760 ILCS of the Code of the
State of Illinois) and its benefits/challenges.
Illinois is the granddaddy of Land Trust Law. This is
the reason why most Land Trusts throughout the USA
are referred to as “Illinoistype Land Trusts.” Chicago
Title formed the first Land Trust made in the United
States to help a builder develop and sell lots for a suburb
of the City of Chicago, Illinois.
While Illinois does not have a
specific Land Trust Statute, it does
have over 100 years of case law that
most other states default to when
deciding Land Trust cases. As a
point of interest, Barak Obama,
holds title to his house in the
suburbs of Chicago in a Land Trust
(his attorney is the Trustee). While I
cannot prove it, some say that 90%
of the commercial property in Cook
County, Illinois (Chicago), is held in
Land Trusts. Needless to say, Land
Trusts are very popular in Illinois.
This fact produces good news and
bad news when using Land Trusts in
Illinois.
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The good news is that because Illinois Land Trusts
have been around so long and used to such a large degree
within the State, it is easy to find legal help with Land
Trust issues AND title companies are very familiar with
insuring Land Trusts. Furthermore, most property
insurance companies are also accustomed to correctly
insuring a Land Trust (making the Named Insured the
Trustee and the Trust).
The bad news is, Illinois law has plugged the benefit’s
hole to some degree. For example, Illinois has a law that
any transfers of the beneficial interest in a Land Trust are
NOT VALID unless reported to the local taxing bodies.
However, there is a good lesson in this tale because if
you read the law carefully you discover that the law
ONLY applies to counties of 3 million or more in
population. There is only one county in Illinois that holds
that many soles…Cook County! The rest of the State of
Illinois is exempt from this law (it always pays to read
the fine print).
Illinois law also requires that the Trustee perform
certain “duties” to validate the Trust Agreement. I do not
want my trustee to have ANY duties other than to hold
and convey title (at the minimum). As discussed in
previous newsletters, other states (e.g. Virginia) do not
require any duties of a trustee other than to hold title.