Thomas Bennett Real Estate Lawyer Boston MA

Wednesday, June 27, 2012

Protecting Real Estate Assets



by 
Thomas V. Bennett

The ownership or investment in real estate provides a number of choices with respect to how to hold title particularly if there are partners who own the real estate.
 
Real estate can be owned in the individual's name, or, if a couple, it can be owned as: tenants by the entirety for married persons either of the same or different gender; joint tenants which means that upon the death of either, the property will pass to the other by operation of law; as tenants in common under which on death the property would pass to the heirs or devisees of the deceased owner; or as tenants in partnership in which the deceased partner's interest would pass to the other partner by operation of law with the duty and obligation of the remaining partners to account to the heirs of the deceased partner as of the date of death as to the value of the deceased partner's interest in the real estate.
 
Ownership of real estate poses liability problems for negligence of the property owner which could result in personal injury to either the tenants or parties visiting the property. Real estate can also be attached for the debt of the owner. For those reasons, i.e. to limit liability and to make the interest in the real estate difficult to be attached, people very often own real estate in different entities.
 
For many years, trusts were a popular entity for holding title to real estate, particularly so-called “nominee trusts” which are really straw transactions where the trustee holds title for the benefit of the owners pursuant to a schedule of beneficiaries that is not recorded at the Registry of Deeds. The problem with that form of ownership is that during the dark real estate days of the 90's the FDIC was very aggressive in suing the trustees and the beneficiaries of nominee trusts on the basis of theories of law which hold that both the trustee and the beneficiaries as the agent and the principal can be held personally liable for the obligations of a note secured by a mortgage on real estate . Corporations were never really popular in the ownership of real estate because although they provide limited liability, they had adverse consequences in that a corporate tax would have to be paid, in addition to the individual tax.
 
Limited partnerships were used frequently where there were in fact investors and a general partner who would really run the real estate entity. Those, however, were cumbersome and expensive for the smaller commercial property owner and in order to again avoid liability, the general partner was generally a corporation which had to be more than a shell in order to pass muster under the tax code all of which added additional levels of cost for excise taxes, accounting and legal fees.
 
The limited liability company and the limited liability partnership have provided an ideal solution for protecting both against liability and allowing for partnership treatment for tax purposes similar to the use of the nominee trust and the limited partnership. There is an expense, however, since the annual filing fee for a limited liability company or a limited liability partnership is $500 per year.
 
No matter what form of entity is selected, there are still issues to deal with on what happens if one party wishes to sell their interest or becomes bankrupt or dies. The other concern is a creditor who seeks to “reach and apply” the interest of a party in such entity. The courts have held that a creditor may “reach and apply” a debtor's interest in intangible property that cannot otherwise be executed against in an action of law; i.e. a beneficial interest in a trust or a membership interest in a limited liability company or a limited liability partnership.
 
Although creditors may not “reach and apply” a debtor's interest in a trust that includes a “spendthrift” clause by which the creator of a trust forbids creditor attachments, special rules apply when the party creating the trust creates a trust for his or her own benefit and also attempts to immunize the trust from creditors' claims. In Massachusetts the courts have adopted a rule that provides that a creditor may reach the maximum amount that a trustee of a trust could pay to a beneficiary. This rule keeps the debtor from protecting “his property in such a way so he can still enjoy it but prevent his creditors from reaching it.” It is not necessary for the party to intend to defraud his creditors. The rule has special force in the case of nominee trusts where the beneficiary can control the trustee's actions but it applies even where the trustee has sole discretion. Even if there are anti-assignment clauses in the trust agreement or the operating agreement of the limited liability company, the court has ruled the reach and apply statute in Massachusetts is broadly written and contains no express reservation for cases in which an anti-assignment clause exists. The courts have found that a court can override a self-imposed non-assignment clause as readily as self-imposed clauses barring creditor attachment. The court can in applying the reach and apply statute impose equitable limitations if the court, due to operational provisions for example, felt that they would be important.
 
It is important, therefore, in any entity in which more than one individual is going to be involved that the entity take into account through its operating agreement or a joint venture agreement, if a trust, or any other operating document for its governance, the transfer of membership interest either voluntarily or involuntarily and how that will impact the operation of the entity and should also provide for possibilities of expulsion and the calculation of what the payment should be for the expulsion for the interest of the party being expelled and how it will be paid; for example, by note over a period of time at a favorable interest rate.
 
This is particularly of concern for so-called “high risk” professionals such as doctors, lawyers, chiropractors and others, as well people actively involved in businesses where they sign guarantees and otherwise incur personal liability.
 
Those folks who own real estate in a trust should consider, given recent court rulings involving trusts, a different form of entity to hold title to investment real estate and the provisions of the governance agreement among the members of that entity.
  

88 comments:

  1. You can contact the builders and they will make sure that everything is as it should be Local Realty Service

    ReplyDelete
  2. At the time of writing, a search of "Denver real estate" returned 2,670,000 Web sites. Even a neighborhood specific search for real estate can easily return thousands of Web sites. margaret ville

    ReplyDelete
  3. Presence of mind manages that a solitary family home will cost you altogether not exactly a multi-family home, and will acknowledge likewise. What are the favorable circumstances? The peace that accompanies it is luring for a few. villas for sale in Los Flamingos,

    ReplyDelete
  4. Most new Real Estate Agents don't realize that the hardest piece of the business is finding the business. Moreover, they've quite recently spent around $2000 for their permit and board levy, so the LAST thing they need to do is to spend more cash! the opus condo

    ReplyDelete
  5. you should begin to assess the potential for gratefulness in business real estate costs and actualize your investment methodology rapidly. Warehouse For Sale In Dubai

    ReplyDelete
  6. I am upbeat to locate your recognized method for composing the post. Presently you make it simple for me to comprehend and execute the idea. Much obliged to you for the post.  Juniper Hill Condo

    ReplyDelete
  7. I am jovial you take pride in what you write. It makes you stand way out from many other writers that can not push high-quality content like you. Utah homes for sale

    ReplyDelete
  8. I know your aptitude on this. I should say we ought to have an online discourse on this. Composing just remarks will close the talk straight away! What's more, will confine the advantages from this data.  https://www.valsqld.com.au/

    ReplyDelete
  9. A more efficient way to locate for-sale-by-owner properties is to search for a for-sale-by-owner Web site in the geographic area.https://www.valuationsvic.com.au/

    ReplyDelete
  10. I'm constantly searching on the internet for posts that will help me. Too much is clearly to learn about this. I believe you created good quality items in Functions also. Keep working, congrats! houses513.com

    ReplyDelete
  11. This is an incredible rousing article.I am basically satisfied with your great work.You put truly exceptionally accommodating data...  Real estate Agents

    ReplyDelete
  12. I will go into assembling a group in a later part. The idea of assembling a group is so when you don't know something you have colleagues that comprehend what to do and can assist you with inquiries. land for sale in mauritius

    ReplyDelete
  13. Purchasing or buying real estate properties in www.strawhomes.com can be a complex procedure where several important, legal, financial details are required

    ReplyDelete
  14. They then sell this information to people who are willing to pay for it. So if you are a real estate agent looking for real estate leads and either don't have the time to find your own, or simply don't want to, then this may be a good option for you.real estate exam prep

    ReplyDelete
  15. Most new Real Estate Agents do not realize that the hardest piece of the business is finding the business. In last they spend large amount of money in their business. Real estate attorney miami will help you in resolving disputes related to the business.

    ReplyDelete
  16. Believe it or not, understanding how the business of real estate works offline makes it easier to understand online real estate information and strategies.
    Agence Immobiliere Rezé

    ReplyDelete
  17. Please continue this great work and I look forward to more of your awesome blog posts. Sell home in Calgary, AB

    ReplyDelete
  18. Normally, as the operator generation increments, maybe on a yearly premise, his/her split will progress. White Label Crowdfunding Software for Sale

    ReplyDelete
  19. Most by far is purchased and sold through real estate intermediaries. (We use "specialist" and "dealer" to allude to a similar expert.) real estate agents key west fl

    ReplyDelete
  20. This is because of their real estate information and experience and, in any event truly, their elite access to a database of dynamic properties available to be purchased. Real estate agent

    ReplyDelete
  21. SpainForSale.Properties is an Exclusive Real Estate Agency offering Luxurious Properties For Sale and Rent on the Costa del Sol, such as: Luxury PLOTS FOR SALE IN MARBELLA SpainForSale.Properties is considered one of the most trusted Exclusive Real Estate Agencies in Marbella, Costa del Sol and other “Prime Locations” in Spain. Live on the Costa del Sol and Enjoy a Luxurious lifestyle in one of the most beautiful places of the World. Luxury Properties For Sale in Prime locations of the Costa del Sol: Mijas, Marbella, Benahavis, Estepona ….
    #LuxuryRealEstateMarbella #LuxuryPropertiesMarbella #Investment #PropertySpecialist #Immobilienmakle #العقارات #недвижимость #Fastigheter #Mäklare #ForSaleMarbella @SpainForSale.Properties
    @SpainForSale.Properties #Marbella #Costadelsol #PuertoBanus #VillaForsaleinMarbella #VillaForSaleMarbella #RentalsMarbella #ApartmentsForsaleinMarbella #PlotForSaleinMarbella #CostadelGolf
    SPAIN FOR SALE
    LUXURY Property for sale in Duquesa
    spain for sale sells villas for sale in Nueva Andalucia
    luxury properties for sale in Marbella
    marbella spain best priced property for sale
    beachfront property for sale in spain
    PLOTS FOR SALE MARBELLA
    properties for sale in spain by the sea
    property for sale in Puerto banus with sea views
    LaZagaleta-Property for sale in and exclusive development
    cheap property for sale in spain
    property in nueva andalucia marbella for sale cheap

    ReplyDelete
  22. Interesting topic for a blog. I have been searching the Internet for fun and came upon your website. Fabulous post. Thanks a ton for sharing your knowledge! It is great to see that some people still put in an effort into managing their websites. I'll be sure to check back again real soon. Links Locksmith Jacksonville

    ReplyDelete
  23. ince most new Real Estate Agents have never been doing business for themselves - they've just filled in as representatives. Kissimmee real estate agents

    ReplyDelete
  24. Thanks a lot for sharing us about this update. Hope you will not get tired on making posts as informative as this. Pick the Right Contractor

    ReplyDelete
  25. This is truly a decent and useful, containing all data furthermore greatly affects the new innovation. A debt of gratitude is in order for sharing it  gutter repair raleigh nc

    ReplyDelete
  26. “Sometimes I feel like if you just watch things, just sit still and let the world exist in front of you - sometimes I swear that just for a second time freezes and the world pauses in its tilt. Just for a second. And if you somehow found a way to live in that second, then you would live forever.” Gutter covers for every type of gutter

    ReplyDelete
  27. I want to say thanks for beautiful blog sharing with us. Your blog really great resource to update my knowledge. Rain Gutters

    ReplyDelete
  28. Waow this is quite pleasant article, my sister love to read such type of post, I am going to tell her and bookmarking this webpage. Thanks House blog

    ReplyDelete
  29. Nice article shared by you. Get the Work accident attorneys who will help you to get out from work place hazards. For the more details you can visit on Work accident attorneys

    ReplyDelete
  30. Found this article is full of informative and helpful content, really love to read it. Hire the experience and professional lawyer from eatonfamilylawgroup.com who can resolve your legal issues. Visit us on Houston child custody lawyer

    ReplyDelete
  31. Great post, please keep on sharing amazing article like this! It makes me happy reading your post. sadivorceattorney.com is one of the top child custody law firm/office at reasonable prices. Visit us on Child custody lawyers

    ReplyDelete
  32. The primary motivation behind REITs is to pass the benefits to the financial specialists in as unblemished way as could be expected under the circumstances. Subsequently at first, the REIT's business exercises would for the most part be limited to age of property rental salary.companies that buy houses reviews Los Angeles

    ReplyDelete
  33. Good to know about this informative blog. Thanks for sharing this blog. Get the best and professional child custody solutions from our professional's lawyers at the reasonable cost from burwelldivorcelawyer.com. For more visit here Child Custody Lawyers Houston

    ReplyDelete
  34. A large number of your companions, relatives and associates may have utilized moving organizations, so approach them for any dependable moving organization. hire man and van london

    ReplyDelete
  35. Indeed, even an area explicit quest for real estate can without much of a stretch return a great many Web locales. Local Realty Service

    ReplyDelete
  36. The other way of purchasing real estate leads is by subscribing to a real estate lead generator website that will send you much smaller lists of leads on a regular basis.Honest Air Fayetteville NC

    ReplyDelete
  37. This comment has been removed by the author.

    ReplyDelete
  38. Good to know about the renting and owning law. Resolve your legal problems as soon as possible from thestallingslawfirm.com who have the professional and expert lawyers. For the more details you can check Family Law Firm in Montgomery TX that offers a wide range of services.

    ReplyDelete
  39. Our exploration shows that China alone, burned through $22 billion on U.S. lodging over the most recent a year, substantially more than they went through the prior year. Drywall contractors Vancouver

    ReplyDelete
  40. This information is meaningful and magnificent which you have shared here about the Real Estate. I am impressed by the details that you have shared in this post and It reveals how nicely you understand this subject. I would like to thanks for sharing this article here. home buyer leads online

    ReplyDelete
  41. The best approach for anyone contemplating real estate development will depend on his or her own personal and financial circumstances, but the key message here is that you must do something!markham condos for sale

    ReplyDelete
  42. The most ideal route for them to get more customers is to some way or another get all the more real estate leads. In addition to the fact that they need more leads, drywall contractors Burnaby

    ReplyDelete
  43. If I was lucky like I was many times over doing this system of purchasing homes in Mayfair and the appraiser would use homes a block or two away and come back with an appraisal of $45,000. Dacor, Viking, Wolf, KitchenAid, Ovens Repair Near Me

    ReplyDelete
  44. Apart from these, the third most important category is NRI ( non-resident Indians). They mostly invest in residential properties than commercial properties. Emotional attachment to native land could be reasons for their investment.House for sale in Clinton mo

    ReplyDelete
  45. I personally hold my properties in an Limited Liability Company (LLC). 1 of the things i encourage real estate investors to do is to put their properties in an LLC. Great Article!

    ReplyDelete
  46. Local - Buy real estate close to where you live. Don't buy real estate in another state or in another country. Keep real estate investing local. Buy in your own county and in your city. Chalet for rent in Beirut

    ReplyDelete
  47. We are the trusted office movers dubai service provider company. We have over 10 years of experienced in office movers.

    ReplyDelete
  48. RC MOVERS PACKERS is famous for Home movers in Dubai and Office movers Dubai that can provide comprehensive solutions for residential and commercial relocation services in your areas. We have top-level staff who are very talented and very honest in house movers Dubai and office movers Dubai fields. They provide a complete solution for all kinds of relocation services in your locality. So if you need a house, office, and villa movers service.

    ReplyDelete
  49. I am thankful to you for this article because you are providing such good information real estate assets as I see. It gives me good information and helps me. Share more articles like this. vancouver rental management

    ReplyDelete
  50. This comment has been removed by the author.

    ReplyDelete
  51. This comment has been removed by the author.

    ReplyDelete
  52. The lack of a managed centralized database can make these properties more difficult to locate. Traditionally, Local Dwelling these properties are found by driving around or looking for ads in the local newspaper's real estate listings.

    ReplyDelete
  53. As a hint, when you realize the over pricing phenomenon, you have to understand that this happens when the real estate agent , best roommate finder NYC or seller is aware of the real estate property's value, and he tries his luck in a raising price.

    ReplyDelete
  54. Thanks for sharing such informative stuff. we provide Blown In insulation Toronto at affordable prices. for more info visit our website.

    ReplyDelete
  55. Superbly written article, if only all bloggers offered the same content as you, the internet would be a far better place.. LBJ Lake Houses

    ReplyDelete
  56. We have experienced workers for the House painting service in Dubai, Room painting service dubai, and Living room painting service dubai. If you need a House painting service dubai, an interior painting company dubai, and an Outdoor house painting service dubai? Just contact our Eagle Technical services LLC for a House painting service dubai.

    ReplyDelete
  57. We are a good response and well capable company in Dubai for JVC LED TV repair Dubai
    , JVC LED TV repair Dubai with the proliferation. We always offer the doorstep service at moderately decent to excellent with skilled television repair technician in no time at all.

    ReplyDelete
  58. customers to it, and most amazing aspect all by getting them through your own organization. There are without a doubt alternate methods of creating real estate leads too, yet these are the most widely recognized techniques - all of which have demonstrated to work in a limited way. Ramen deuren

    ReplyDelete
  59. This comment has been removed by the author.

    ReplyDelete
  60. You are really amazing as the post you have shared here contains some helpful content about real estate.Palo Alto houses for sale Thanks for publishing this post.

    ReplyDelete
  61. Find property listed in Opasco.com, a property portal Marketplace for UAE property agencies, property developers and property broker’s to lineup their properties for sale and rent in Dubai. Luxury Apartments for sale

    ReplyDelete
  62. Well we really like to visit this site, many useful information we can get here. immobilienmakler mülheim

    ReplyDelete
  63. If you are looking for Best movers in dubai and Best movers in Dubai then you are at the right place. We will pack and shift your household items very carefully so don’t worry about your items to be damaged or hampered.

    ReplyDelete
  64. MSIT Solutions is a top Digital Marketing Company in India with a corporate office in Bihar. We are committed to offer world-class ethical digital services with a professional approach.

    ReplyDelete
  65. Really enjoyed this article post. Really looking forward to read more. Will read on...cambodia real estate sihanoukville

    ReplyDelete
  66. The ceiling of a house is one of the biggest parts, but unfortunately, it is not very visible every house get damages such daily wear and tear. So you can contact combined contracts for Gypsum false ceiling in patna or false ceiling services in Patna at a very low budget whether you want to get decorate the interior ceiling or repair false ceiling.

    ReplyDelete
  67. I appreciate you sharing this blog article. Really thank you! Really Great.cambodia real estate sihanoukville

    ReplyDelete
  68. Here, we give a couple of realities that will be helpful for those thinking about interest in Real Estate in the US and Califonia specifically. reformas en zaragoza

    ReplyDelete
  69. The issue comes in when a real estate specialist has gone through their present customer list. reformas en zaragoza

    ReplyDelete
  70. and merchants has raised which more than compensates at the lower costs as far as how much a given real estate specialist could make in the current real estate market. we buy house fast pittsburgh

    ReplyDelete
  71. You've written a very useful article about asset valuation companies in uae. This article provided me with some useful knowledge. Thank you for providing this information. Keep up the good work.

    ReplyDelete
  72. I told Terry not to try and contemplate conversing with individuals who lived nearby to us. I told her in the event that one of them comes over with a nut cake I will take it and dropkick it like a football squarely into their patio. I accept I was experiencing Philadelphia column home condition. My new neighbors in Warminster ended up being awesome individuals, yet it took me eighteen months before I was able to discover that. Silk bed sheets

    ReplyDelete
  73. Here, we give a couple of realities that will be helpful for those thinking about interest in Real Estate in the US and Califonia specifically. We Buy Houses Milwaukee

    ReplyDelete
  74. And another result of the rise in available properties is that more and more people are becoming first-time homeowners. real estate

    ReplyDelete
  75. Here, we give a couple of realities that will be helpful for those thinking about interest in Real Estate in the US and Califonia specifically. We will take the occasionally troublesome dialect of these subjects and endeavor to make them straightforward.
    long silk robe

    ReplyDelete
  76. FINANCING THE HOME: There must be an arrangement on out how can you go to pay for the house! The real estate agent assists you with figuring out what you can manage. A realtor can prompt you on home credit projects, and hotspots for up front installments you in any case couldn't have known about. Silk bed sheets

    ReplyDelete
  77. Installment - most installments include a choice charge paid to the dealer forthright. Not to be mistaken for the security store inhabitants pay to move in.
    Choice charges - paid forthright to the dealer, considered to be a responsibility of the purchaser/occupant to the realestate rent buy choice.mens silk pajamas

    ReplyDelete
  78. These variables all lead to a certain something - a more serious requirement for real estate specialists to help the trading of these properties. Subsequently, despite the fact that costs have fallen, the amount of accessible properties, purchasers, and venders has raised which more than compensates at the lower costs as far as how much a given real estate specialist could make in the current real estate market. we buy houses Milwaukee

    ReplyDelete
  79. They would rather sell their home and buy a comparable home for a much lower price, and take the loss so that they can improve their cash flow situation by having a lower mortgage payment each month. Utah real estate school

    ReplyDelete
  80. Im thankful for the blog post. Really looking forward to read more. Great.https://www.chapmanhomeshq.com/seattlerealestateagents

    ReplyDelete
  81. I find out real estate investors telling all the time that they aren't receiving seller phone calls and subsequently aren't receiving the leads they need to find the real estate business deals they require to earn a living. Are you looking for Lenders?

    ReplyDelete
  82. They would rather sell their home and buy a comparable home for a much lower price, and take the loss so that they can improve their cash flow situation by having a lower mortgage payment each month. sell your house with us

    ReplyDelete
  83. Really glad to say, your post is very interesting to read. I never stop myself to say anything about it. You are doing a great job. Thank you for sharing this blog here.
    Small Business Loans Covid
    Small Business Relief

    ReplyDelete
  84. which makes the possibility of Investment in US Real Estate much more appealing. We buy houses Dallas

    ReplyDelete
  85. And since there is no shortage of properties to buy, these people had no problem finding a suitable home for a good price. real estate

    ReplyDelete
  86. One real estate professional was in a home, garden and hardware store a few calendar weeks ago and went past a couple of guys in an aisle. A conversation was heard while he walked by, I overheard one state, "That is the real estate man". Sell my house fast

    ReplyDelete
  87. I am interested Fridge Repair Services
    Millennium Plaza Hotel Tower, Office: 1504, Sheikh Zayed Road, Dubai, United Arab Emirates.
    Contact number - 045864033
    For help Free Pickup & Delivery all home appliances repair


    ReplyDelete