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California Title Holding Trust

The Title Holding Trust, often referred to as Land Trusts or Holding Trusts, has been in use in California for a good many years.  I have personally been involved in the drafting, creation, and administration of Title Holding Trusts for real estate investors and homeowners in California since 1986.  I have administered Title Holding Trusts that were drafted and established back to the late 1930's. 

Common Ways to Hold Title to California Real Estate

However, the Title Holding Trust is not a well know method for holding title to real property in California.  You might be interested in reading about the Eight (8) Common Ways to Hold Title to California Real Estate.  I helped draft this years ago when I worked for The Chicago Trust Company of California (part of Chicago Title).  It was Seven (7) Common Ways to Hold Title back then. 

Roots in the Illinois Land Trust

The Title Holding Trust has its roots in the Illinois Land Trust.  Land trusts have been used in Illinois since 1868.  The Title Holding Trust or Land Trust is a simple and inexpensive method for acquiring, holding and disposing of title to California real estate and personal property. 

Parties to the Title Holding Trust in California

The person that intends to acquire the real estate in a Title Holding Trust is known as the trustor or Grantor or Settlor.  This is the person that has set-up the Title Holding Trust in order to acquire and hold title to California property.

Generally, the Trustor will also be the beneficiary or owner of the Title Holding Trust.  The beneficiary has complete authority over the trust and generally has the power of direction.  The power of direction can be delegated by appointment. 

A trustee will be named or appointed within the Title Holding Trust Agreement.  The trustee acquires and holds title to the real estate or personal property on behalf of the trust.  The trustee in our Title Holding Trust agreements is Exeter Fiduciary Services, LLC.  

Benefits of the Title Holding Trust

I will cover the advantages and the benefits of using a Title Holding Trust in my next post, so stay tuned. 

William L. Exeter
President and Chief Executive Officer
EXETER 1031 Exchange Services, LLC
EXETER Fiduciary Services, LLC

 
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12 Comments on California Land Trust or Title Holding Trust

SEP
20
2008
126,928 Points Outside Blog

Hi Rick,

It varies from state to state. 

For example, Illinois has the Illinois Land Trust.  Florida has the Florida Business Trust.  MA has the MA Business Trust.  California has the Title Holding Trust.  Other states vary depending on state laws, regulations, etc.  It is really just a living trust designed specifically for holding title to real estate. 
11:19am • #1
JAN
08
2009
345,913 Points 1 Featured Post

Bill ... thanks for this nice article about taking title to property in name of LAND TRUST OR TITLE HOLDING TRUST. I intend to link to your article in my ARarticle on the subject. Best wishes. Harrison
11:57am • #2
126,928 Points Outside Blog

Hi Harrison,

You are most welcome.  Thank you for visiting and thank you for linking back.  There are so few who really understand the benefits of the Title Holding Trust.

Talk to you soon.
7:45pm • #3
AUG
15
2009
159,287 Points

Bill,

Thanks for the interesting information. Do you know if Washington State owners can take advantage of either California or Illinois Land Trust?
1:41pm • #5
AUG
16
2009
126,928 Points Outside Blog

Hi Bill,

You are most welcome.  Yes, you can use the land trust in Washington, and like California, they do not have any specific code that covers land trusts, like Illinois does.  There is very little guidance available.
3:53pm • #6
MAR
18
2010
Outside Blog Hit Router

Great info, BIll...thanks!  Working with a client now who discovered this option, and it may work for them.  We're exploring it together.  Any other resources you can recommend.  I notice a Webinar in April, but we need info sooner than that.  Appreciate your guidance.
11:48am • #7
126,928 Points Outside Blog

Hi Pam,

You are most welcome.  Here is a link to our web page with our Newsletters.  There is one that specifically discusses Title Holding Trusts (see below info.): http://www.exeter1031.com/The_exchange_Newsletter_Archives.aspx

Volume III  Issue I
Topics Include:
Cultivating the Title Holding Trust (Land Trust)
Overview of the Title Holding Trust or Land Trust
24 Reasons to use a Title Holding Trust (Land Trust)
Tax Implications with a Title Holding Trust (Land Trust)

I would be happy to discuss the transaction with you, too.
12:38pm • #8
MAR
30

Can this be used effecitvely if I take over a property subject-to existing loan(sub2) in CA? How complicated and what forms to use?
james
2:18am • #9
126,928 Points Outside Blog

Hi James,

You must be very careful here so that you do not trigger the due on sale clause and/or commit lender fraud.  The answer is: it depends on the loan documents.  If the loan documents define a due on sale trigger as conveyance of title to a third party, then you may have a problem because the assignment of a beneficial interest of a Land Trust is considered a conveyance of title.  There has been a lot of abuse in this area.
2:49am • #10
JUL
10

Hi,

Please advise if I can use Title Holding Trust in the state of Texas.

Thank you very much.
Devonne
2:38pm • #11
AUG
05

Hi Bill:

I'm a RE broker in CA and one of my clients is trying to buy a property under a Land Trust. We are running into the problem that title companies do not want to insure those trusts. Can you explain to me why that is?  Thank you!

Markus
Markus
3:59pm • #12
AUG
10
126,928 Points Outside Blog

This is a very common problem these days.  The issues revolve around the fact that there has been so much abuse (read fraud) involving land trusts.  Investors use land trusts to get around the due on sale clauses, to acquire property subject to existing debt without getting lender approval, to avoid seasoning requirements, flipping prevention, etc., so title insurance companies are now rightfully gun shy.  It is really too bad. 

It is still possible to get them insured by title companies, but you must work really hard to convince the title insurance company that there is no fraud involved.  You may want to consider recruiting one specific title insurance officer, one escrow/closing/settlement agent, etc., and then educating them as to exactly why you are using the land trust (and why there is no fraud involved).  This way you have a team in place that is familiar with land trusts, the process, the issues, and most importantly, you and your client. 
6:34pm • #13

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