IS THE SECRECY OF A LAND TRUST LAWFUL? RANDY HUGHES
In Arizona, for example, the fear of organized crime
Iowa’s primary concern when it comes to privacy of
prompted action by its legislature (see New York
ownership is the possibility of hiding ownership of
Times, March 30th, 1976 at 20, col 4). The AZ
property by nonresident aliens. Under Iowa law (see
legislature enacted, as an amendment to the
Property Rights of Aliens under Iowa and Federal
recording statute, a provision requiring every
Law, 47 Iowa L. Rev. 105) a nonresident alien may
conveyance to, or from, a Trustee to include the
not own more than 640 acres located outside the
names and addresses of the beneficiary or persons
corporate limits of a town or city (see Iowa Code
representing the beneficiary. However, it is unclear
Ann. 567.1). However, the prohibition on nonresident
under this law if the Trustee of another Trust (i.e. a
alien ownership in Iowa speaks of “acquiring title to,
personal property trust), a corporation, or a nominee
or holding” real estate. It is unclear whether indirect
can be listed as the beneficiary and still comply with
ownership (i.e. via a Land Trust or nominee) is
the law.
prohibited. It is also interesting that the Iowa law
mentions no penalty for non-compliance!
In Illinois, the land trust statutes seemed to have
evolved from legislative apprehension over slum
What is interesting about some states’ attempts to
housing problems and corruption among public
control Land Trust information and force disclosure,
officials, as with the previously stated Thoma s
are their statutes are event-based. The event that
Keane case. A 1963 law enacted in Illinois requires
triggers disclosure is the transfer of title into or out of
full disclosure of a Land Trust beneficiary “within 10
the trust. Occurrences after conveyance into the
days of receiving a notice or complaint of
trust, such as beneficiary changes or amendments to
violation of any ordinance relating to condition
the trust agreement, need not be disclosed.
or operations of real property affecting health or
safety.” The apparent intent was to force disclosure
There is an inherent conflict between those who
of the “true owners” of buildings with housing code
want to own property privately and the interests of
violations. While there is a $100.00 per day penalty
the
for non-compliance of the law, nowhere does it spell
agencies. While it is true that some nefarious
out specific procedures to compel disclosure.
characters will attempt to use a land trust to avoid code
general
public
and
Yes, LLC’s and Corporations offer
more direct asset protection benefits,
but the Land Trust
provides more privacy of ownership
and indirect asset protection benefits.
some
governmental