In previous articles, we have looked at different ways to own property in Florida. For example, you may own real property as the sole owners, as tenants in common and as joint tenants with right of survivorship. The Florida land trust is another form of property ownership you may want to consider.
Someone who loses a lawsuit might have a civil judgment filed against them and the property they own. Liens are sometimes placed on property because of the owner’s debts or obligations.
However, this is not likely to happen with property held in a land trust.
The Florida Land Trust Act states the following:
“ . . . the beneficiaries of a land trust are not liable, solely by being beneficiaries, under a judgment, decree, or order of court or in any other manner for a debt, obligation, or liability of the land trust.”
As beneficiary of a Florida land trust, you typically will not be held liable for the land trust’s debts and obligations. This may include civil judgments against the land trust.
Most property is owned through instruments recorded at the county recorder’s office. As public records, these deeds and other property-related documents can be viewed by anyone.
However, property ownership remains more confidential with a Florida land trust. The trustee is the only person whose name appears on public records. In most cases, the beneficiaries of the land trust remain confidential.
Here’s one example of how a land trust might work:
A group of college friends decide to buy property in Port St. Lucie but want to keep their purchase private. Several people in the group are employed in careers with high risk of lawsuits. So, protecting the property from personal liability is a top priority as well as protecting the friends from lawsuits stemming from the property itself.
After consulting with an attorney, they formed a Florida land trust — The FiveGuys Group Trust. One partner, Dave, is named as trustee on the trust, although they could have chosen a completely uninvolved person or entity to serve.
The purchase is made by The FiveGuys Group Trust. Dave is the only person named on the purchase agreements and deeds. If they are sued, the individual owners should be relatively safe. If any of the owners other than Dave is sued personally, the property most likely will be safe from judgments or liens.
Setting up any trust, including a Florida land trust, is best left to people with a deep understanding of Florida laws. Improper use of a land trust may lead to unintended – and unpleasant – consequences.
Attorney John Mangan is board certified in Wills, Trusts & Estates by the Florida Bar. Please call us at 772-324-9050 or use our Contact Form to set up an appointment. We help clients throughout Florida, including Stuart, Palm City, Hobe Sound, Jupiter, and Port St. Lucie.