A Succinct History of the Illinois-Type, Title-Holding, Third-Party Trustee, Revocable Inter Vivos Land Trust
Real Estate and one’s financial interest in it are notoriously the most immovable and publicly exposed evidence of personal Wealth ever. It has been said that if you own real estate, it’s a forgone conclusion that someone will eventually do their best to take it away from you. Historically, the publicly recorded ownership of real property has subjected owners to the demands [both reasonable and unreasonable] of the government, and it’s often overly pervasive authority, as well as the demands of those to whom the accumulation of any kind of wealth is regarded as selfish, objectionable, sinful and unconscionable.
In feudal England (circa 1500), there existed a plethora of restrictions on the ownership of real estate. Any conduct of a property owner that might be deemed opposed to, or unacceptable by, the ruling government (from town and county to country), allowed for myriad retributive actions that were fully enforceable by the state (i.e., the state’s seizure of one’s real property at will for any number of trumped-up infractions).
Some of these retributive actions included a forced forfeiture of land for reasons of treason, impairment of feudal duties of the landowner to his overlord, induction by conscription into the military service, lateness in payment of income or property taxes. And all of these reasons for seizure were compounded by the severely inhibiting laws of “primogeniture (i.e., the right of the eldest son to claim full ownership of his parents’ estate to the exclusion of all younger siblings).” All of the onerous penalties of real estate ownership ultimately caused a politically emerging populace to explore and devise measures to protect their ownership from these burdens.
With the advent of the land trust model, an owner fearing governmental reprisal for his own political views, or someone seeking to avoid attachment for debt, or attempting to provide for the granting of his property, other than in accordance with the rigid rules of primogeniture, could just place the ownership of his property in a trusted friend. The contract between parties would, of course, carry a clear and legal understanding that the trusted friend (the trustee) would deal with the land under certain circumstances as the owner, but that all direction would come from the trust’s beneficiary and grantor of title. In this manner, the arrangement now known as the land trust emerged and flourished under the rather despotic reign of King Henry the Eighth.
However, not to be circumvented by the intelligence of the masses, Henry the Eighth, himself, in 1536 devised and enacted the concept of specific “Uses (land uses).” The statute’s intent was to avoid the frustrations of governmental authority and decreed that a Use was to be executed, and the title of the property was to be vested in the beneficiary rather than the trustee (enabling seizure of the property). Approximately nine years later, the English courts mitigated the effect of this legislation by holding that the Statue of Uses, though to remain in effect, was not applicable to an active use or trust wherein the trustee has active duties to perform. Therefore the land trust model was no longer to be executed by the Statute of Uses. The Statute of Uses, in a variety of forms, has since become and stable part of Common Law in England as well as within the United States, as have the later constructions of the statute by courts in enactments of specific Land Trust legislation in Illinois, Hawaii, Florida, Virginia, North Dakota and Georgia. As a result, the land trust concept is now fully accepted in the US as the preferred arrangement by which one person can hold property for the benefit and use of another is rapidly becoming a familiar part of the law.
Since the migration of the common law land trust model to the US, it has been utilized in a variety of ways, including: risk management, organization, financing, exposure shifting, credit operations, arbitration and incorporation of ownership and partnership interest.
The combination of a land trust arrangement with its many applications, and with its virtually limitless permutations results in an infinite variety of applications that can be devised by the ingenuity of the modern real property owner. The land trust is now 468 years old, and one of the finest tools for real estate ownership and management ever conceived of.
In the creation of the Landtrust.net Equity Holding Transfer System™ (EHTrust™), we have integrated the common law land trust model with a triple-net lease agreement, an assignment of beneficiary interest, a beneficiary agreement and a limited power of attorney. This combination of forms allows for a clear and safe transfer of ownership benefits from one party to another without a title transfer or the standard risk of seller-assisted financing arrangements.
The EHTrust™ very conveniently allows for the facilitation of all of the fee-simple ownership benefits of virtually any “creative financing” method, including the desired end-results and objectives of: the lease option, the lease purchase, the equity-share, the wrap-around mortgage (AITD or AIM), the contract-for-deed (i.e., the land sale contract), or any other subject-to seller carry arrangements.
The system can also accommodate safe, fast and simple condominiumization of multi-unit buildings, fast and simple time-shares, fast and simple seller-carry bridge loans, the simplest partnering arrangements, full asset protection, etc.
Welcome to our Universe. Ours is a completely different world of real estate investing. Above all, one must know that the EHT is not another creative financing device: it is the means and way to accomplish the objectives of all of the above referred-to devices with maximum safety, simplicity and legality.