A Florida Land Trust is a unique way of acquiring ownership of a piece of real estate, regulated by Section 689.071 of the Florida Statutes. A land trust is an arrangement between two parties, the trustee and the beneficiary. The trustee holds both legal and equitable title of a property for the benefit of the beneficiary.
It is very common for Real Estate agents, even those with many years of experience, to confuse this particular instrument with other trusts, such as revocable and irrevocable trust. However, they are nothing alike.
Maybe the most notorious use of land trust happened in the 1960's. When the Disney brothers were looking for a location to house the "Happiest place on Earth", they wanted to keep the ownership private and avoid attracting speculators and paying inflated prices. They used several Florida Landtrusts to purchase large contiguous tracts of land. Today this place is called Walt Disney World Resort.
There are several benefits to selling property into a land trust, chief among them is privacy. Here are some benefits to the seller:
1) Lower closing costs. Closing into a land trust represents a benefit to the seller because we always offer to pay for the seller's title insurance, documentary stamps on the deed. These are customarily charged to the seller. In addition, we will bear all the cost of creating the land trust. All this ultimately results in a higher net to the seller.
2) Ease of foreclosure. Because the property is held in a land trust the seller may keep an equitable interest in the property. In the event that the buyer defaults on the loan, all buyer equitable interests are deeded back to the seller.
3) Keeping liens and judgements off the property. We live in a litigious society and anybody can be sued for anything. Because ownership of property is kept in privacy, most liens and judgements against the owner do not attach to the property.
4) Avoiding probate. Sellers that agree to receive a future stream of payments, may include at no cost contingent beneficiaries. In other words, if they want to pass the future payments to their heirs they can do it very easily without the need of probate.
5) Saving in title insurance premiums. If we pay lower closing costs, there is more money left to everyone else, that includes you and your client.