A trust eliminates risk?

I recently saw an on-line commercial wherein an attorney was offering to provide landlords (and anyone else) a kind of a "do it yourself kit" that would aid in preventing a fraudulent tenant from suing his landlord. Since this seems to be an ever increasing threat in our field, can anyone out there some basic enlightenment on this topic?

Thank you

Al newbie --173.48.xxx.xxx

A trust eliminates risk? (by Ellen newbie [RI]) Posted on: Feb 19, 2019 3:59 PM
Message:

For what its worth, my partner and I looked it something like what you described,but my attorney eventually steered us to a banker who sold us a 5 million dollar insurance 'rider' for covering this kind of risk.

Good luck!

Ellen --173.48.xxx.xxx

A trust eliminates risk? (by Richard [MI]) Posted on: Feb 19, 2019 4:17 PM
Message:

As I understand it, trusts are more for estate planning and tax planning. Insurance is for covering the risk of being sued.

To lower the risk, maintain places well, know the laws and don't break them. --23.121.xx.xxx

A trust eliminates risk? (by Johnny B. [MA]) Posted on: Feb 19, 2019 4:20 PM
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Maintaining your properties in good condition, screening tenants thoroughly, and having a large umbrella policy are your best defenses. --24.147.xx.xxx

A trust eliminates risk? (by Ken [NY]) Posted on: Feb 19, 2019 4:31 PM
Message:

Nothing can keep you from being sued.A basic land trust will help to hide your identity as owner but if you are managing the property you will get sued anyway but if you have 10 houses in 10 different land trusts then if you get sued at one of them it wont affect the other 9 houses even if they get a judgment against you.Realistically this will not work if you expect to put a mortgage on the property because no bank is going to let you own it in a land trust if they have a mortgage on it --72.231.xxx.xxx

A trust eliminates risk? (by Mel [MA]) Posted on: Feb 19, 2019 4:56 PM
Message:

Reading the above responses, prompted me to ask the following question;

If "there is no way to protect oneself from being sued by a tenant," and a fraudulent tenant files a phony lien on one of my properties, could this interfere in any way with selling and, or, financing said property?

Thank you

Mel

--173.48.xxx.xxx

A trust eliminates risk? (by NE [PA]) Posted on: Feb 19, 2019 5:00 PM
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Mel, how could they randomly file a fake lien on your property without taking you to court and winning? --50.107.xxx.xx

A trust eliminates risk? (by Mel [MA]) Posted on: Feb 19, 2019 5:08 PM
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To NE,

I am concerned with how a bank would respond to a pending sale of one of my a properties if they knew I was POSSIBLY going be sued.

Mel --173.48.xxx.xxx

A trust eliminates risk? (by Mel [MA]) Posted on: Feb 19, 2019 5:08 PM
Message:

To NE,

I am concerned with how a bank would respond to a pending sale of one of my a properties if they knew I was POSSIBLY going be sued.

Mel --173.48.xxx.xxx

A trust eliminates risk? (by Mel [MA]) Posted on: Feb 19, 2019 5:08 PM
Message:

To NE,

I am concerned with how a bank would respond to a pending sale of one of my a properties if they knew I was POSSIBLY going be sued.

Mel --173.48.xxx.xxx

A trust eliminates risk? (by mike [NY]) Posted on: Feb 19, 2019 5:13 PM
Message:

I think Mel has asked a very interesting question,

And I really hope someone can answer it!

Mike --173.48.xxx.xxx

A trust eliminates risk? (by Ne [PA]) Posted on: Feb 19, 2019 5:17 PM
Message:

But you need to answer how they are going to file a phony lien onto actual property. They need to go through proper channels to get a real lien. A phony lien is just that, phony. It's either a real lien or it isn't. --50.107.xxx.xx

A trust eliminates risk? (by mel [NY]) Posted on: Feb 19, 2019 5:27 PM
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To Mel

Ok, lets assume its a legitimate lien. Do you think this could in any way interfere with consumating a sale?

Thank you --173.48.xxx.xxx

A trust eliminates risk? (by NE [PA]) Posted on: Feb 19, 2019 5:32 PM
Message:

If it's a legitimate lien that's on the property, you're going to need to clear it up to give clean title to your buyer. (Provided you haven't paid it yet.)

Good time to offer them .10 on the dollar.

I think it's over worry really. What got you there in the first place?

I would say that if your operating with an LLC that the lien would be against the LLC and not the house specifically. Do what your ex tenants do, let it hang out there forever until you have to clear it up.

Again, I think that your worrying in a realm of fantasy. Highly unlikely situation that would arise. --50.107.xxx.xx

A trust eliminates risk? (by Don I [MO]) Posted on: Feb 19, 2019 6:04 PM
Message:

" but if you have 10 houses in 10 different land trusts then if you get sued at one of them it wont affect the other 9 houses even if they get a judgment against you."

Not, quote accurate. The beneficiary of the Trust (owner) will be held liable. If you are the owner of the Trust, then YOU are liable.

But if property A is owned by Trust A and the beneficiary of Trust A is Property's, LLC then you have your layer of protection.

An LLC insulates against liability. A Trust DOES NOT -- a Land Trust, if set up properly, will only help hide who the actual owner is. --198.23.xxx.xxx

A trust eliminates risk? (by razorback_tim [AR]) Posted on: Feb 19, 2019 6:20 PM
Message:

If I had but a fraction of a percent of the money that's been spent by RE investors with paranoia-inducing asset protection gurus, I wouldn't need to own any rentals to live the rest of my life in luxury.

Bottom line is take reasonable precautions, don't do business with people who have a history of litigation, and carry good insurance. If you want to use LLCs and trusts they have their places in the reasonable precaution area, but don't think that there's a silver bullet that will protect you from any and all lawsuits. --66.194.xxx.xxx

A trust eliminates risk? (by plenty [MO]) Posted on: Feb 19, 2019 7:13 PM
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and while there are all these TRUST that cost money and effort to keep separate, if taken to court and in Discover they will ask you about all your assets, so like you are not going to lie under oath,,, so spill the beans,,, there is no hiding in this world of technology. Hope I'm wrong. Once they ask the question, it's out there and you can not lie. --173.127.xxx.xx

A trust eliminates risk? (by Landlord ofthe Flies [TX]) Posted on: Feb 19, 2019 7:39 PM
Message:

"I am concerned with how a bank would respond to a pending sale of one of my a properties if they knew I was POSSIBLY going be sued."

Basically you're either sued or not sued. It's not official until it's filed. Then it becomes a cloud on the title that must be settled before the sale. So I wouldn't worry about knowing if you're possibly going to be sued because you're not going to know about it until you become served. Everything up to that point is speculation.

Advantages to Trusts is basically to protect heirs during the settling of estate and prove intent for them to inherit. There's NO WAY you personally are going to evade a lawsuit if you're acting as property manager even if it's in a trust. They'll sue the trust and sue you too because you're responsible. Like others, I too took the liability insurance route. The best defense is a big easy target pile of money in the trust for them to target. --108.69.xxx.xxx

A trust eliminates risk? (by Robert J [CA]) Posted on: Feb 19, 2019 7:50 PM
Message:

The first line of protection is to maintain proper insurance and limit your risk and exposure. Just because one has an insurance policy means nothing. Like allowing your child to ride his bicycle at night with no lights and wearing dark clothing -- taking a unlighted street.

If you have renters with children and pets you need to maintain the right landlord protector policy and make sure your tenant carries renters insurance to cover loss of his belongings and if there is a law suit because of something his family did. Like leaving their children's toys in the driveway, walkway or side walk and having the mailman do a trip and fall. Why should the landlord be sued when it was the tenants fault. --47.156.xx.xx

A trust eliminates risk? (by Britt [NC]) Posted on: Feb 20, 2019 3:29 AM
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There are two different kinds of trusts. There is the one that just hides your name because you retain ownership. Say you own a property at 123 Main St you might call it 123 Main St Trust and you can buy, sell, etc without a lot of trouble. If you do this, its best to buy it in the name of the trust so it's less obvious you own it; no record of a transfer from John or Jane Doe to the trust. The second kind, is when you give up control and appoint a trustee. This makes it harder for someone to get to the asset because you can layer it in different entities. The problem is you have to be able to trust the trustee. It can be a pain to buy and sell and your trustee has to be cooperative with your wishes. --172.74.xx.xxx

A trust eliminates risk? (by RB [MI]) Posted on: Feb 20, 2019 5:14 AM
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Right on, razorback. --184.53.x.xxx

A trust eliminates risk? (by myob [GA]) Posted on: Feb 20, 2019 5:38 AM
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There is no silver bullet to protect yourself 100%. Putting all these suggestions posted into your business model is really how to do it. Good property, umbrella coverage and no fear of threat of suit by tenant is key.

Here in GA anyone can place a lien-- but it must be perfected-- "proven". So if it's a fraud-- and most are- it's found out. The finding of a lien that you know is wrong is handled at the closing. Closing Attorney may hold back funds equal to claim until resolved. --99.103.xxx.xxx

A trust eliminates risk? (by Ray-N-Pa [PA]) Posted on: Feb 20, 2019 5:44 AM
Message:

A trust does make it easier to sell a place subject to. This is something that most beginners have a clue about.

The trade off:

You will be limiting yourself to portfolio commercial lenders and typically commercial rates are more expensive than conforming loans.

So this is a balancing act.

As for eliminating risk? HMMMMMM if it reduces it any, that might be a bit of an embellishment. If someone wants to sue you, they are. It only makes it a little bit more difficult to file and provide service. An attorney can and will sit file. Perhaps a yahoo tenant might get stopped but a professional will just send it to where the tax bills go and if necessary request alternative service. They are pros - this is what they do.

I promised someone some background info on trust.....it was one of the regular posters. I am sorry. I lost track of the contact info. Can you repeat it

--72.23.xxx.xx

A trust eliminates risk? (by AllyM [NJ]) Posted on: Feb 20, 2019 11:43 AM
Message:

The Trust is an "entity" itself and has it's own tax number. They would sue the trust not you. It does protect children from governors of NJ who decide suddenly that children have to pay inheritance tax. Fortunately I "knew" that something was going to happen like that years before it did and encouraged parents to make a trust. They did. --173.61.xxx.xx

A trust eliminates risk? (by RentsDue [MA]) Posted on: Feb 20, 2019 11:54 AM
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A trust doesn’t eliminate risk. Nothing ELIMINATES risk. You can limit risk by limiting liability . If you are in business long enough you will be sued whether or not you did anything wrong. That is why insurance is such a booming business and personal injury lawyers advertisements are every third commercial. You are smart to be thinking ahead. --71.10.xxx.xxx

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