GA RE attorney says land trusts not legal; use living trust + LLC
Hi BPers (and, I hope, helpful lawyers),
I have read online that one can secure traditional financing while getting asset protection by getting a traditional residential mortgage in one's own name, putting the title in a land trust at closing time and then, after closing, assigning an LLC as the sole beneficiary of that land trust. This is a strategy recommended by some people, especially Chris Coons from Anderson Advisors (see here and here) for reasons explained in those links and at the bottom of this post.
I spoke to a Georgia real estate attorney (closing attorney) earlier today about this and he told me that land trusts are illegal in Georgia. He also suggested that I may be able to achieve the same benefits and protections by following the same strategy using a revocable living trust instead of a land trust.
Is he right?
- Are land trusts illegal (or effectively unusable) in Georgia? More to the point, will it be impossible for me to get title insurance with the title held in a land trust (as he says)?
- Would a revocable living trust be an acceptable substitute for a land trust if I want to follow this strategy?
- Are there drawbacks to this approach (vs. quit-claiming or closing in an LLC and using commercial financing) that I would be wise to consider?
As many investors know, while doing a quit-claim deed to assign ownership from an individual to an LLC is fairly common practice, it comes with the risk of a traditional loan being called due when a routine title audit discovers the reported change in ownership. That financial risk is what I want to avoid by using a trust, while also achieving inside liability protection via the LLC.
Thanks in advance for any input / non-advice. I know you are not my lawyer!
Note: I intend to check with another GA attorney on this but it would be very nice to get a sanity-check from the experienced folks on this forum.