Land trusts (or passive trusts) are a type of trust that pop up in title insurance transactions every once in a while. They can be difficult to deal with in Minnesota as they are used in other states, but are not legal in the state of Minnesota. As a result, they can present a number of difficulties. In this article, we are going to highlight three things you should know about land trusts as they relate to title insurance.
Land Trusts Aren’t Like Other Trusts
Land trusts are different from most other types of trusts in that the beneficiaries of the trust (not the trustee) control the disposition of assets. This is the opposite of most other trusts in which the trustee controls the disposition of the assets.
Land Trusts Are Only Legal in Some States
Land trusts are often used in states on the East Coast. However, in many states (including Minnesota), they are not legal. As a result, it’s important to take extra care when recording title and issuing title insurance for properties involving land trusts.
It’s Important to Review Land Trusts Before Recording Title
Land trusts require some extra scrutiny on the title insurer’s part. If a land trust gets recorded in Minnesota because the parties involved aren’t aware of Minnesota state laws restricting land trusts, then the owner will have a pretty big issue on their hands from a title perspective.
Professional Commercial Title Solutions
Commercial title insurance is a necessary element of any commercial transaction. Even so, many people don’t know who to go to for title insurance. At Commercial Partners Title, we’re here to help you with all your commercial title needs. With decades of experience under our belt, we have the knowledge and expertise to help you. Reach out to our commercial title experts today to talk about the particulars of your transaction. You can find us at our main office in downtown Minneapolis, but we work on transactions throughout the United States!