*Must* Land Trust be in same State as property?

Question

Hi, everyone.  Question around Land Trusts and in-state Operating LLCs.  When an in-state LLC is the beneficiary of a Land Trust, you have a legal entity that is recognized by the State (ie. the LLC) that can take action in court (eg. evict tenants).

This begs the question;  Why can't all of my Land Trusts, then, be formed in Wyoming?  The only thing that springs to mind is possibly scaring off lenders?  Would love to hear your thoughts.  Thx!  - Dave

Dave Row · Answer

Just consistency in managing trusts that hold property in multiple States.  I know that a foreign LLC operating in a State must register in that State, but had not read that requirement for trusts.  - Dave

Dave Row · Answer

Just to close the loop here, I received reliable counsel that you should, indeed, use in-State Land Trusts.  Still good to roll these up to a WY LLC for anonymity, when doing cash deals.

Patti Robertson · Answer

Virginia requires any foreign entity to register as such and have an in state registered agent.  What is it that you are hoping to gain by registering in Wyoming?

Dave Row · Answer

Sean, I appreciate the thoughtful reply.  When you say "owns," the property is deeded to the trust, whereas the LLC is the beneficiary.  So, the trust is the "owner."  Interestingly, however, the trust can roll up to a Wyoming LLC and receive zero charging order protection, because the plantiff will go after the beneficiary/LLC.

So, still wondering when/whether the State of trust really matters.  - Dave

Sean Morrison · Answer

You typically want the entity that owns the property to be within the same state as the property. That's because real estate laws are very specific to the state and courts will apply local laws regardless of where your LLC or trust is located. However, other entities associated with the owning entity can be somewhere else. The question is whether the LLC or the trust owns the property. If the LLC owns the land, there is no reason an out of state trust could not own the LLC.

Carl Fischer · Answer

@Dave Row

They could be in Wyoming. Virginia has great land trust law. Not sure why Wyoming but a land trust does not have to be housed in the state where the property is. Rights are sometimes affected but usually not an issue.