What's up guys,
It's Clint Coons here and in this video I really wanted to hit on
the four mistakes that I see people make time and time again
when they're deeding property into their limited liability company or land trust.
All right. Let's get started.
All right. So here's the deal.
Four crucial mistakes that can come up if you're ever going
to prepare your own deed, which I highly recommend.
You do not prepare your own deeds when you're transferring your real estate
into your various business entities, because there's just a lot of things
that could get messed
up, especially with the legal description that could possibly cloud title
or even create problems with your overall asset
protection structure or with insurance.
So what are the four main problems that I see time and time again?
Well, the first one that I see is people who use a quitclaim deed.
All right.
And you probably heard of this term before.
If you gone to a local REIA or you just Google on the Internet, people always say,
oh, I'm going to quitclaim this property into my entity.
The problem with that is if you use a quitclaim deed,
what you're doing is you're transferring whatever you own.
And what I mean by that is you may not even own the property.
You're giving someone a deed, and then you get whatever I have.
Well, if you're creating an asset protection structure
and of course, you're looking to put put a property
like this into a limited liability company over here.
And you want to deed it in, right?
We're going to need it if we're using a quick, clean deed.
We want people to think that this LLC that we've set up,
if we're doing it with anonymity purposes, that we don't own it.
Right. I'm down here.
And if I use a quitclaim deed to transfer property from my name into an LLC
that that my name is an associated with for anonymity purposes.
An attorney like myself.
If I saw that being used, I would know that this person here,
the person that owned the property, is also this person over here,
the person who was involved with the LLC, even though their name is not on it.
How do I know that?
Because with a quitclaim deed, if you were transferring
real estate to a bona fide purchaser, like if you wanted to sell me
your property, you said, Clint, I'll give you a quitclaim deed for my property.
Be like, Hell, no. I want a warranty deed.
So I know that if you transfer me property and you don't own what you say you own,
or what's contained in the deed
that I can come back against you for any title defects,
that is the only type of deed that good faith purchasers are.
Value meaning it's a legitimate transfer to an individual
would accept, especially trying to get title insurance.
So this is the first mistake that I see
when people try to prepare their deeds and move property into the entity.
The second mistake is the name.
All right. So
when you took title to this property,
let's say the title was taken as Clinton M Coons.
Okay, so that is my full legal name.
It went from Tom to Clinton M Coons.
Now, when I prepare the deed, transferring it from
my name to my limited liability company, what I need to do is look at this
original deed here and make sure
that I'm using the same name.
What happens many times is, you know, I go by Clint right?
So what I'm going to do is I'm going to prepare a deed from Clint to the LLC.
And so I did it from Clint Coons to the LLC.
Well, this will create a problem
because the property was originally deeded to Clinton M Coons
and then Clint Coons is to the LLC
now granted same person, but for title issues.
This right here is a huge problem for people.
So you don't
you want to make sure you take that deed that you originally received.
Look at how your name reads on the deed and make sure when you're preparing
your new deed into your entity, you spell your name the exact same way
or if it was you and your spouse, the way they titled it.
Clint Coons and
Traci Coons.
Husband and wife as community property.
Well, then I will use that same language to say Clint Coons and Tracey Coons.
Husband and wife is community property.
Hereby warrant grant convey blah blah blah into the limited liability company.
So the second mistake people make is not ensuring that the names
right here are the same.
Okay.
So that brings me to the third issue that has to do with this deed.
So whenever you're dating property,
you have to come up with your legal description, right?
The legal description is what describes this asset here.
Now, if your property is encumbered, then you
you have most likely a deed of trust in your file
because the bank, when they loaned you the money to buy this property,
they recorded their security interest against the property.
And so they put a legal description in their security instrument
so they could attach it to the property.
Now doesn't happen a lot, but it happens enough
that when deeds of trusts
that banks record against real estate as to secure the collateral,
those legal descriptions they use don't always match
with the original deed that conveyed the property to you.
So do not use the legal description in the deed of trust.
When you're preparing your deed, use
the legal description that is contained in your original deed.
That's what you got to do. All right.
Brings me to my fourth one
now. This isn't so
much with the deed itself, but it has to do with the tax statement.
So when you transfer your real estate into an entity like this,
if you're putting together a structure where you want anonymity
and you don't want people to know you're associated with that company,
then we are tenants to be able to look you up.
Granted, if I pulled title now to this house right here and I saw that
it was owned by this LLC and I looked up the limited liability company
and I notice that no one's name is associated with it
or it sends me down a road and I can't figure out who owns it.
Granted, you think, Hey, I've accomplished something,
but here's where you can screw up on that.
Because when you deed the property and it's going to always ask
at the top of the deed, you're put on there
where property tax statements are to be sent.
Or maybe it's a form, change of ownership form.
You have to send the assessor's office.
Well, when you fill that
out, you think, gosh, I want the property tax statements coming to me.
So you put your personal address on there.
Bingo.
That's exactly how I'm going to find you.
So when you're completing your deed, whenever it asks for an address
for property tax statements,
do not use your personal address or an address associated with you.
If you're trying to build anonymity, either use a P.O. box.
We offer a mail forwarding service at Anderson
that we handle for all our clients.
When we're doing their deeds, we have
it sent to us and we forwarded on so we can sever all those ties.
So the craft, the attorney won't be able to figure out
who's actually involved with this company,
because there was this one little thread there that gave it all away.
All right, guys, I hope we got a lot out of this.
As far as transferring deeds, if you like the video, hit the like button.
Share it out to some friends.
And you know, we teach a tax and asset protection event every couple of weeks
and I
typically will have a posting on my site if you want to be able to join me
on a Saturday, be sure to check it out because I cover a ton of strategies
when it comes to tax and asset protection for real estate investors.
You take care.