- Hey guys, Clint Coons here,
and in this video,
I want to talk about the use of deeds,
and put a little different spin on it
that you may not be aware of,
on how you can go about deeding your property
without anybody knowing.
Okay, let's get started.
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All right, so here's the deal.
If you've bought property before,
you know what a deed, how a deed works, right?
People get a deed, they transfer property to someone.
You receive your deed if you've bought the property.
You take that deed down to the county recorder.
You record it right away.
And now you're listed as the legal owner on title
to that real estate,
so the whole world at large knows.
So a lot of people assume that in order to transfer title
for a legally enforceable deed, you have to record it.
Well, that is not the case.
When you're transferring title to property,
the recording aspect of a deed isn't necessary.
Now, it's important. Don't get me wrong, all right?
You want to protect yourself against claims
against title of the property.
You got to get it recorded
to put the world on notice who the owner is,
but it's not a legal element to transfer real estate.
Here's what's required
in order to transfer title to property.
And the reason I'm telling you this
and sharing this with you
is that I'm going to give you a strategy when I'm done
on how you can go about transferring real estate
without anybody knowing.
So here's what they require.
Number one, the person who,
you have to show
that you have intent to transfer, all right?
That is the individual, the grantor,
the person who was deeding the property, one,
so there has to be intent there.
Now, how do we establish intent?
Well, you got to have, it has to be in writing.
The deed has to be in writing, and it has to be signed.
And typically,
it needs to be signed in front of witnesses, or notarized.
So that shows that the person who intended
to transfer the property, right, wanted to do it,
because they wrote it all out, and they signed it.
Now, you have to have a legal description
of the property, right?
Legal description,
so you know which property you're transferring.
And on top of that,
you need to have delivery, and acceptance.
Okay, so what does that mean?
That you actually take the physical deed,
and you give it to the person you're transferring it to.
So that means delivery.
Bring it to them, hand them the deed,
and then they sit there, and they accept it.
They take it from you.
Cause remember, on a deed,
the only person that signs the deed is the grantor.
The grantee is the person receiving it.
So when you list out, when you complete a deed,
it says, the grantor, Clint Coons,
hereby grants unto
and conveys the following described real estate
to wit to the following individual,
you know, Fuzzy Dice, LLC.
That's how you put a deed together.
But the manager of Fuzzy Dice doesn't sign the deed itself.
Clint is the only one who has to sign the deed,
'cause that's establishing my intent.
Now, how does Fuzzy Dice, the LLC,
how does it prove its acceptance?
By taking the physical deed,
and then putting in their files.
But what most people do is they'll go and record it.
Why does Fuzzy Dice, LLC,
the new owner of this property, want to record it?
Well when Fuzzy Dice records the deed,
it puts the world on notice
that Fuzzy Dice, now, LLC, is the owner.
So Clint over here, who originally owned the property?
If I try to sell it to someone else,
let's say I approach Green Dragon, LLC,
and tell 'em, "Hey, tell you what.
I got a piece of property here on 76th Avenue.
You want to buy it from me?"
And Green Dragon, what are they gonna do?
They're gonna do a title search.
They're gonna say, "Well, Clint, you don't own it.
It's owned by Fuzzy Dice, LLC.
You can't sell me property you don't own."
But if Fuzzy Dice didn't record it,
I could sell it to Green Dragon.
I can turn around
and sell it to anybody, to Karen as well.
I can sell it as many different people as I want
until somebody records it,
and the first person records it,
they own the property.
And in that case, everyone else can sue me.
But you know, they'd have to find me.
I'm gonna be on an island somewhere, right,
and move out of the country.
So that's why we have recording statutes,
is to prevent that type of fraud.
But when you're dealing with your own real estate,
there may be those instances where you don't necessarily
want someone to know who the current property owner is.
I'll give you two examples.
Number one, let's assume that I'm in a state
that has a transfer tax.
And when you record the deed,
they're gonna bang you with a high transfer tax.
Okay, I still want the asset protection.
So what happens in those states,
is a client wants to put up...
A investor wants to put up a limited liability company,
and they want to take the house
that they currently own in the own name,
they had to buy it in their own name because of financing,
and they want to put it into this LLC.
But if they deed it to the LLC, and record the deed,
they're gonna get hit with $10,000 at the county level.
They're thinkin',
"I need asset protection, but I don't want it for $10,000.
That's for sure."
So they don't do anything,
and they keep the property in their own name,
and eventually something goes wrong,
and now they get sued for $250,000.
Well, I tell ya what, that $10,000,
you wish you could go back in time, right?
And pay that, and get it protected.
But that horse has already left the barn.
So in those situations,
what you may want to consider is deeding the property
to the limited liability company,
so you would deed it, but not record.
All right?
So you deed it, but not record it.
So you'll still show up.
You're still gonna show up on the deed.
If somebody runs a title search,
your name is still gonna be
associated with that property, unfortunately.
But you no longer own the property.
The property is owned by this limited liability company.
Because if you go through this, you show the intent.
So you put together a deed,
legal description of the property,
you sign in front of witnesses, or notarization,
you then deliver it to the manager of the LLC.
So you then take it, as a manager of your LLC,
showing that you accept it.
And then you have your tenants pay rent to the LLC
on a monthly basis.
You've met all the legal requirements.
Your LLC owns that property,
and you didn't have to pay the 10K.
But the reason I set it up this way
is because as I told you a minute ago,
if you got sued personally for 200,
and there's a $250,000 claim
that's possibly coming against you,
and you thought, "Man, I would be more than happy
to go back and pay that 10K and fix this,
so that property is not in my name."
Well, you've already taken care of that problem, right?
Because that deed,
and we call these types of scenarios,
we call 'em pocket deeds, okay?
So if you want to look it up online,
do some other search on this.
It's called a pocket deed,
because you hold it in your pocket,
and you carry it around with you as the owner of it.
So if it's your company,
your company's got it in its LLC binder, the books.
So you've got this pocket deed,
so as soon as that lawsuit hits,
you think it's gonna be an issue,
you take that deed down, you record it.
And yeah, you're gonna pay 10,000 bucks to record it.
But isn't the alternative much better?
Right?
I mean, by recording,
is that much better than the alternative,
where if you didn't record it
and pay the 10K,
you risk losing it,
because there's a judgment
coming down the road, potentially, after you for $250,000?
So I think you'd be best to record it.
So this is how you can straddle that line,
don't record it until you need to,
and then pay the recording fee at that point in time.
Now, when you record it, you might be saying,
"Well, Clint, what about the fraudulent transfer?"
Because if you get sued...
If you get sued on July 1st,
and you record this deed on August 10th,
couldn't someone say, "Wait a minute,
that's a fraudulent transfer.
You transferred that property after you were being sued."
No, no, no, no, no.
Remember, I prepared this deed,
transferring it into the LLC, three years ago.
That property was transferred three years ago.
Recording has nothing to do with the property transfer.
This is what's called a pocket deed.
And so for those situations,
where there's a high transfer tax,
you can still have asset protection.
You don't get the anonymity,
'cause you're gonna have to leave the property in your name.
Now, there is some risk there, too.
If somebody gets a judgment against you,
and you don't know about it,
they could drop that judgment on that property,
and it's gonna stick to that property,
because this company hasn't shown that it's the owner yet.
So there's always that you have to be aware of.
Make sure you're monitoring any filings against you,
or if somebody does give you notice of it,
you're taking action.
You just don't want to let it lay there.
So this is how you can do it.
The other thing that, benefit of this type of strategy
with the pocket deed, I've seen people use it before,
is let's assume that it's in,
from one entity to another.
If you bought, you had a properties here,
and you'll see this every so often, though,
where there's properties in an LLC,
and you can't pull them out,
because it was easy putting them in,
but then the county will tax you when you take 'em out.
So what you'll do there, then,
is you'll create new LLCs,
and you'll just deed the properties over,
but just don't record 'em.
You just don't record those.
That would be a strategy to protect it.
Another strategy you could possibly use here
would be a land trust as well.
Another use for a land trust,
is I could set up a land trust,
and it was a little off-topic
but just giving another strategy.
Put the property inside of a land trust first.
That typically would not be taxable.
And then you could assign the land trust
over to that new LLC.
So now the deed's going with the land trust.
So that's an option.
So it really depends.
But the thing about it I wanted to convey is that
you can transfer title to property without recording.
And there may be instances in your investing
where you need to move property into a structure.
You want the asset protection,
but you want to avoid the cost of recording.
Consider a pocket deed.
All right guys, hope you got a lot out of this video.
If you like it, leave me some likes.
Hey, and if you know of anyone out there
that is looking for this information,
make sure you direct them to my channel.
And I get a lot of questions from individuals as well
about different types of strategies.
If you haven't been to my main channel,
make sure you go to the main channel, and just search.
I've got a lot of content there
that probably addresses many of the questions you have.
All right. Take care, everyone.
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