Monthly Archives: November 2017

COVENANT REVITALIZATION

IS MY COMMUNITY ELIGIBLE TO REVIVE A DECLARATION OF COVENANTS?

The following requirements must be met in order to be eligible to seek approval from the Department of Economic Opportunity to revive a declaration of covenants:
(1) All parcels that will be governed by the revived declaration must have been governed by a previous declaration that no longer governs some or all of the parcels in the community;
(2) The revived declaration must be approved by a majority of the affected parcel owners in writing or by vote at a meeting of the affected parcel owners; and
(3) The revived declaration may not contain covenants that are more restrictive on the parcel owners than the covenants contained in the previous declaration.

WHAT IS THE ORGANIZING COMMITTEE AND WHAT MUST IT DO?

The organizing committee must consist of at least three parcel owners from the community. The organizing committee must prepare the complete text of the proposed revised declaration of covenants to be submitted for approval. The organizing committee must also prepare the full text of the proposed articles of incorporation and bylaws of the revived homeowners’ association to be submitted to the parcel owners for approval, unless the association is already an existing corporation.

WHAT MUST BE INCLUDED IN THE PROPOSED REVIVED DECLARATION AND OTHER GOVERNING DOCUMENTS?

The proposed revived declaration and other governing documents must provide that the voting interests and proportional assessment obligations of each parcel owner shall be the same as it was under the previous governing documents. It must contain the same amendment provisions as the previous documents. If there were no previous amendment provisions than it must include amendment provisions that require the approval of no less than two-thirds of the affected parcel owners. The proposed revived declaration cannot include any provisions that are more restrictive on the new parcel owners than the covenants of the previous governing documents.

WHO NEEDS TO BE NOTIFIED AND WHAT IS THE NOTIFICATION PROCESS?

A complete copy of the proposed revised covenants, the proposed new or existing articles of incorporation and bylaws of the homeowners’ association, and a graphic depiction of the property that will be governed by the revived declaration must be presented to all of the affected parcel owners either by mail or by hand delivery at least 14 days before the time that the consent of the affected parcel owners is sought.

WHAT APPROVAL IS NECESSARY FOR A REVIVED DECLARATION?

A majority of the affected parcel owners must agree, in writing, to the revived declaration of covenants and governing documents of the homeowners’ association or approve the revived declaration and governing documents by a vote at a meeting of the affected parcel owners noticed and conducted in the manner prescribed by 720.306. Proof of notice of the meeting to all affected owners of the meeting and the minutes of the meeting recording the votes of the property owners must be certified by a court reporter or an attorney licensed to practice in the State of Florida.

WHAT DOES THE ORGANIZING COMMITTEE NEED TO DO AFTER GETTING APPROVAL FROM THE AFFECTED PARCEL OWNERS?

Within 60 days of the date of approval by the affected parcel owners, the organizing committee must submit the proposed revived governing documents and supporting materials to the Department of Economic Opportunity to review and determine whether to approve or disapprove the proposal.

To submit the necessary documents to the Department of Economic Opportunity, the organizing committee should send the necessary documents to the following address:

Department of Economic Opportunity
Attn: Division of Community Development
107 East Madison Street, MSC 160
Tallahassee, Florida 32399-4120

WHAT MUST BE INCLUDED IN THE SUBMISSION TO THE DEPARTMENT?

The submission must include:
(1) The full text of the proposed revived declaration of covenants and articles of incorporation and bylaws of the homeowners’ association.
(2) A verified copy of the previous declaration of covenants and other previous governing documents for the community and any amendments.
(3) The legal description of each affected parcel and a plat or other graphic depiction of the affected properties in the community.
(4) A verified copy of either:
a. The written consents of the requisite number of affected parcel owners approving the revived declaration and other governing documents; OR
b. If the approval was obtained by a vote at a meeting of the affected parcel owners, the notice of the meeting, attendance, and voting results.
(5) An affidavit by a current or former officer of the association or by a member of the organizing committee verifying that the requirements for the revived declaration have been satisfied.
(6) Any other documentation that the organizing committee believes is supportive of the policy of preserving the residential community and operating, managing, and maintaining the infrastructure, aesthetic character, and common areas serving the residential community.

WHEN WILL THE DEPARTMENT OF ECONOMIC OPPORTUNITY MAKE A DETERMINATION?

The department has 60 days from the time it receives the submission to make its determination as to whether the proposed revived declaration of covenants and other governing documents comply with the requirements.

If the department determines that the proposed revived declaration and other governing documents comply with the requirements and have been approved by the affected parcel owners, then the department will provide the organizing committee with written approval.

However, if the department determines that the requirements have not been satisfied, then the department will provide written notice that it does not approve the governing documents. The written notice will also include the department’s reasons for the disapproval.
WHAT DOES THE ORGANIZING COMMITTEE NEED TO DO AFTER GETTING APPROVAL FROM THE DEPARTMENT OF ECONOMIC OPPORTUNITY?

If the articles of incorporation have not previously been filed with the Division of Corporations, the organizing committee has 30 days to file the articles of incorporation with the Division of Corporations.

Instructions for filing Articles of Incorporation can be found at:
http://dos.myflorida.com/sunbiz/start-business/efile/fl-profit-corporation/instructions/

WHEN & HOW ARE THE REVIVED DECLARATION AND OTHER GOVERNING DOCUMENTS RECORDED?

Within 30 days of receiving approval from the Division of Corporations, the President and Secretary of the association must execute the revived declaration and other governing documents in the name of the association and have the documents recorded with the clerk of the circuit court in the county where the affected parcels are located.

WHAT NEED TO BE INCLUDED IN THE RECORDED DOCUMENTS?

The following must be included in the recorded documents:
(1) The full text of the approved declaration of covenants;
(2) The articles of incorporation and bylaws of the Homeowners’ Association; AND
(3) The legal description of each affected parcel of property.

WHEN DO THE REVIVED DECLARATION AND OTHER GOVERNING DOCUMENTS BECOME EFFECTIVE?

The revived declaration and other governing documents are effective upon recordation in the public records. They are effective as to each affective parcel owner, regardless of whether the particular parcel owner approved the revived declaration. The revived declaration shall replace and supersede the previous declaration as to all affected parcels then governed by the previous declaration and will have the same record priority. The revived declaration may not have retroactive effect with respect to any affected parcels that had ceased to be governed by the previous declaration as of the recording date, and shall take priority with respect to the parcel as of the recording date.

MARKETABLE RECORD TITLE ACT (“MRTA”)

WHAT IS MRTA?

MRTA is a recording act that removes defects and interests in title that is designed to extinguish stale claims and ancient defects against title, enhance marketability of title, and simplify title examination.

DO I MEET THE STANDARDS FOR MRTA?

To meet the standards for MRTA you must identify the root of title. Root of title means any title transaction purporting to create or transfer the estate claimed by any person and which is the last title transaction to have been recorded at least 30 years prior to the time when marketability is being determined. The root of title must also describe the interest to be conveyed.

A title transaction is any recorded instrument or court proceeding which affects title to any estate or interest in land and which describes the land sufficiently to identify its location and boundaries.

WHAT IS THE EFFECTIVE DATE OF A ROOT OF TITLE?

The effective date of the root of title is the date on which it was recorded.

ARE MY RIGHTS AFFECTED BY MRTA?

Generally, under MRTA, a marketable record title is free and clear of all estates, interests, claims or charges the existence of which depends upon any act, title transaction, event or omission that occurred before the effective date of the root of title. All such estates, interests, claims, or charges are declared to be null and void.

However, MRTA specifically provides exceptions for the following rights:
(1) Interests that were disclosed by or inherent in the root of title.
(2) Interests that are preserved by filing notice.
(3) Rights of any person in possession.
(4) Interests that were recorded before the root of title.
(5) Recorded or unrecorded easements or rights that appear in documentary evidence upon which title is based.
(6) Rights of any person in whose name the land is assessed on the county tax rolls.
(7) State title to lands beneath navigable waters acquired by virtue of sovereignty.
(8) An environmental restriction or covenant recorded pursuant to chapter 376 or chapter 403.
(9) Any right, title, or interest held by the Board of Trustees of the Internal Improvement Trust Fund, any water management district created under chapter 373, or the United States.

*Courts have also added several exceptions to MRTA.


PROTECTING COVENANTS AND RESTRICTIONS FROM THE MARKETABLE RECORD TITLE ACT
HOW DO I PRESERVE AN INTEREST IN LAND? HOW CAN A HOMEOWNERS’ ASSOCIATION PRESERVE AND PROTECT A COVENANT OR RESTRICTION FROM EXTINGUISHMENT BY MRTA?

A person claiming an interest in land or a homeowners’ association can preserve a covenant or restriction from extinguishment by filing for record a written notice. This notice must be filed within the 30-year period immediately following the effective date of the root of title. The notice preserves such claim of right or such covenant or restriction or portion of such covenant or restriction for up to 30 years after filing the notice unless the notice is filed again.

DO I NEED TO FILE A NOTICE TO PROTECT MY OWN MARKETABLE RECORD TITLE?

No. It is not necessary for the owner of marketable record title to file a notice to protect his or her marketable record title.

HOW DOES MY DISABILITY AFFECT THIS PROCESS?

A person’s disability or lack of knowledge of any kind may not delay the commencement of or suspend the running of the 30-year period. Such notice may be filed for record by the claimant or by any other person acting on behalf of a claimant who is under a disability, unable to assert a claim on his or her behalf, or one of a class, but whose identity cannot be established or is uncertain at the time of filing such notice of claim for record.

ARE THERE ADDITIONAL REQUIREMENTS FOR A HOMEOWNERS’ ASSOCIATION?

Yes. A homeowners’ association may only file a notice if the preservation of such covenant or restriction or portion of such covenant or restriction is approved by at least two-thirds of the members of the board of directors of an incorporated homeowners’ association at a meeting for which a notice, stating the meeting’s time and place and containing the statement of marketable title action described in 712.06(1)(b), was mailed or hand delivered to members of the homeowners’ association at least 7 days before such meeting. The homeowners’ association is not required to provide additional notice.

WHAT MUST BE INCLUDED IN THE NOTICE?

The notice must contain:
(1) The name or description of the claimant or homeowners’ association desiring to preserve any covenant or restriction;
(2) The name and particular post office address of the person filing the claim or the homeowners’ association; AND
(3) The name and post office address of either:
a. An owner; OR
b. The person in whose name said property is assessed on the last completed tax assessment roll of the county at the time of filing, who is treated as an owner for the purpose of notice.

If a homeowners’ association is filing the notice, then the requirements in section (3) above may be satisfied by attaching to and recording with the notice an affidavit affirming that the board of directors of the homeowners’ association mailed or hand delivered a Statement of Marketable Title Action to the members of that association.

The Statement of Marketable Title Action described above can be found here:
http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0700-0799/0712/Sections/0712.06.html

WHAT REAL PROPERTY INTEREST DO I HAVE?

WHAT REAL PROPERTY INTEREST DO I HAVE?
WHAT ARE FREEHOLD ESTATES?

Freehold estates are possessory interests in land of indefinite duration. The duration of a freehold estate may, however, be limited by a condition. If there are no conditions that limit the duration, then the property interest is in fee simple absolute. If the property interest can be cut short by the occurrence or non-occurrence of an event or other condition, the interest is one of the defeasible fee simple estates. If the property interest terminates upon someone’s death, it is called a life estate.

WHAT INTERESTS CAN I HAVE IF THE ESTATE IS NOT LIMITED BY ANY CONDITION?

Fee Simple Absolute

An interest in fee simple absolute is a fee simple estate, and has no conditions attached to it that could possibly cause its termination. In other words, it is the maximum possible ownership interest known under this country’s system of laws. It is an estate that is possibly infinite in duration.

WHAT INTERESTS CAN I HAVE IF THE ESTATE IS LIMITED BY A CONDITION?

Fee Simple Determinable

An interest in fee simple determinable is a fee simple estate that terminates automatically by the occurrence of a special limitation. These limitations use durational language like: “until,” for so long as,” or “while.” Upon the occurrence of the special limitation the ownership interest automatically reverts to the transferor.

Fee Simple Subject to Condition Subsequent

An estate in fee simple subject to a condition subsequent is similar to a fee simple determinable in that it can be terminated upon the occurrence of an event or condition. These limitations use conditional language like: “provided that,” “but if,” or “on condition that.” Unlike a fee simple determinable, this fee simple interest does not terminate automatically. Instead, the transferor must take some overt action to retake ownership of the property.

Fee Simple Subject to Executory Limitation

An estate in fee simple subject to executory limitation is very similar to the two defeasible fee simple interests discussed above. However, unlike the others, a third party holds the future interest. Upon the occurrence of the terminating condition the possessory interest automatically transfers to the third party.


WHAT INTERESTS CAN I HAVE IF THE ESTATE IS MEASURED BY A LIFE?

Life Estate

A life estate is also a freehold estate. The duration of a life estate can be measured by the life of the grantee, or by the life of another person. A life estate is automatically terminated upon the death of the measuring party, regardless of whether that person is currently in possession of the property.

WHAT ARE CONCURRENT ESTATES?
A concurrent estate exists if more than one person shares an interest in property at the same time. Concurrent owners are referred to as cotenants. All concurrent estates require a unity of possession, meaning that all cotenants are entitled to use, control, and possess the property.

WHAT INTERESTS CAN I HAVE IF I SHARE AN INTEREST IN THE PROPERTY WITH SOMEONE ELSE?

Tenancy in Common

Tenancy in Common is the most frequent form of a concurrent estate, and is the default estate for unmarried cotenants. This concurrent estate only requires unity of possession, meaning all tenants are entitled to possession or control of the property. A person does not need to be in actual possession of the property to be a cotenant. The other unities discussed below are not necessary to create a tenancy in common.

Joint Tenancy

A Joint Tenancy is a concurrent estate that requires four unities: possession, interest, time, and title. This means that the joint tenants’ must have an equal right of control or possession of the property, have an equal interest in the property, and must all receive their interests at the same time and in the same instrument. In addition to the four unities, a joint tenancy also must include a right of survivorship.

WHAT INTERESTS CAN I HAVE IF I SHARE AN INTEREST IN THE PROPERTY WITH MY SPOUSE?

Tenancy by the Entireties

A Tenancy by the Entireties, much like a Joint Tenancy, requires the four unities of possession, interest, time, and title. Tenancy by the Entireties also requires the unity of marriage; this means that the cotenants must also be husband and wife. Tenancy by the Entireties is the default concurrent estate for property jointly owned by a married couple; however married couples may also have the concurrent interests discussed above.


WHAT ARE LEASEHOLD ESTATES?

Leasehold estates are of fixed duration. The lessee, commonly referred to as tenant, receives possession of the property for a fixed period of time according to the terms of his agreement. However, ownership of the property remains with the lessor, commonly referred to as landlord.

I HAVE AN ORAL LEASE. WHAT TYPE OF LEASEHOLD DO I HAVE?

Tenancy at Will

In Florida, any lease entered into orally results in a tenancy at will. (1) The duration of a tenancy at will is determined by the period in which payments are made; if payments are due every week then the duration is week to week, if payments are due monthly then the duration is month to month, etc. (2) A tenancy at will can also be created by written agreement if its duration is determined by the payment periods. (3)

MY LEASE IS IN WRITING. WHAT TYPE OF LEASE DO I HAVE?

Periodic Tenancy

A periodic tenancy automatically continues for successive periods unless a party gives notice to terminate the agreement. (4)

Tenancy for Years

A tenancy for years has a known duration at the time of creation. (5) The duration can be for any amount of time (days, weeks, months, or years). (6) A tenancy for years terminates upon the expiration of the lease term. (7)

DO I STILL HAVE A LEASE IF I OUTSTAY THE TERM OF THE AGREEMENT?

Tenancy at Sufferance

A tenancy at sufferance occurs when a person who was in lawful possession of property remains after the lease expires. (8) Continued payment does not renew the lease, but if the landlord provides written consent then the tenancy becomes a tenancy at will. (9)

WHO HAS AN INTEREST IN MY PROPERTY?
WHAT ARE FUTURE INTERESTS?

If an interest in real property can be cut short by a condition, another person will have what is known as a future interest in the estate. This means that on the occurrence of the limiting condition, another person will receive a possessory interest in the property. This can occur automatically, but, depending on the type of estate may also require an overt act by the person who owns the future interest.

ARE THERE ANY FUTURE INTERESTS IN A FEE SIMPLE ABSOLUTE ESTATE?

Because an estate in fee simple absolute cannot be cut short by any sort of condition, there is no future interest attached to an estate in fee simple absolute.

ARE THERE ANY FUTURE INTERESTS IN A FEE SIMPLE DETERMINABLE ESTATE?

Because there is a chance that an estate in fee simple determinable will be cut short by the occurrence of this special limitation, the transferor retains a future interest in the property called a possibility of reverter. A transferor in possession of a possibility of reverter does not need to exercise a power of termination; the prior estate is terminated automatically upon the occurrence of the special limitation.

ARE THERE ANY FUTURE INTERESTS IN A FEE SIMPLE SUBJECT TO CONDITION SUBSEQUENT ESTATE?

Because there is a chance that an estate in fee simple subject to condition subsequent will be cut short by the occurrence of this limitation, the transferor retains a future interest in the property called a right of entry or a right of termination. A transferor must exercise his or her right of entry (or termination) in order to regain possession of the property.

ARE THERE ANY FUTURE INTERESTS IN A FEE SIMPLE SUBJECT TO EXECUTORY LIMITATION?

Because there is a chance that an estate in Fee Simple Subject to Executory Limitation will be cut short by the occurrence of this limitation, the transferor retains a future interest in the property called an executory interest. A third party who has an executory interest does not need to exercise a power of termination; the prior estate is terminated automatically upon the occurrence of the terminating condition.

ARE THERE ANY FUTURE INTERESTS IN A LIFE ESTATE?

There are two future interests that can follow a life estate. If upon the death of the measuring life, the possession of the property reverts back to the grantor then the future interest is called a reversion. Alternatively, if upon the death of the measuring life, the possession of the property transfers to a person other than the grantor, then the future interest is called a remainder.

WHAT IS A RIGHT OF SURVIVORSHIP?

If an interest in real property is owned as Joint Tenants or as Tenants by the Entireties, then there is a right of survivorship. This means that if one of the tenants dies his or her property will be distributed to the other tenants. If a joint tenant dies, the deceased tenant’s interest is distributed equally among the surviving joint tenants. If a spouse dies, the surviving spouse will receive the deceased spouse’s interest.

HOW DO I KNOW IF MY COTENANCY INCLUDES A RIGHT OF SURVIVORSHIP?

A right of survivorship is present only if the express language of the conveying instrument includes a right of survivorship. (10) “Section 689.15, Fla. Stat., F.S.A., abolishes the right of survivorship in real and personal property held by joint tenants except in cases of estates by the entireties or in tenancies in common where the instrument creating the estate shall expressly provide for the right of survivorship.” (11) This means that the right of survivorship must be created by express language on the conveying instrument. (12)

MUST ALL THE UNITIES BE PRESENT IN ORDER TO INCLUDE A RIGHT OF SURVIVORSHIP?

No, the right of survivorship can be included despite a missing unity. *13) The real issue is not whether all unities are present but instead whether the grantor intends on including a right of survivorship (14). If an instrument expressly provides for a right of survivorship, then it is irrelevant that one of the unities is lacking. (15) Thus, if the express language of the instrument includes a right of survivorship, it is unnecessary to consider the other unities. (16)

THE PROPERTY WAS CONVEYED TO MY SPOUSE AND ME. IS THERE A RIGHT OF SURVIVORSHIP?
Survivorship language is unnecessary to create a right of survivorship between spouses, because by default property conveyed to a married couple, is conveyed as tenants by the entireties. (17) “A conveyance to spouses as husband and wife creates an estate by the entirety in the absence of express language showing a contrary intent.” (18) Thus, including survivorship language in a deed transferring property to a married couple would be redundant. (19)

WHAT HAPPENS TO A TENANCY BY THE ENTIRETIES UPON DIVORCE?

A Tenancy by the Entireties becomes a tenancy in common upon divorce. (20)

1. Fla. Stat. Ann. § 83.01 (West); see also Sill v. Smith, 177 So. 2d 265, 267 (Fla. 2d DCA 1965).
2. Fla. Stat. Ann. §§ 83.01, 83.02 (West).
3. Fla. Stat. Ann. § 83.02 (West).
4. Tenancy, Black’s Law Dictionary (10th ed. 2014).
5. Tenancy, Black’s Law Dictionary (10th ed. 2014).
6. Tenancy, Black’s Law Dictionary (10th ed. 2014).
7. Baker v. Clifford-Matthew Inv., Co., 128 So. 827, 829 (1930).
8. Tenancy, Black’s Law Dictionary (10th ed. 2014).
9. Fla. Stat. Ann. § 83.04 (West).
10. Simon v. Koplin, 159 So. 3d 281, 282 (2015).
11. Id. (quoting Little River Bank & Trust Co. v. Eastman, 105 So. 2d 912, 913 (Fla. 3d DCA 1958)).
12. Id. (citing Crabtree v. Garcia, 43 So. 2d 466 (Fla. 1949)).
13. Id.
14. Id.
15. Id. (citing Crabtree, 405 So. 2d at 467).
16. Id. (citing Winchester, 265 F.2d at 407-08).
17. Id.
18. Id. (quoting Beal Bank, SSB v. Almond & Assocs., 780 So. 2d 45, 54 (Fla. 2001)).
19. Id.
20. Id.

BENEFITS OF PURCHASING A LAND TRUST

A land trust is a legal device for holding any interest in real property in which legal and equitable title is transferred to a Trustee. There are several advantages to holding property in a land trust. Among the most prominent are:
• Probate avoidance
When property is placed in trust it is no longer legally owned by the trustor (original property owner who placed the property in trust). Therefore, when the Trustor dies, the trust property does not constitute property owned by the Trustor at death. Instead, it will pass and be governed solely by the terms of the trust, as opposed to facing a lengthy and costly estate and administration process.
• Privacy
The placing of property in a land trust is done by deed from the Trustor to the Trustee. Oftentimes, the Trustor is also a beneficiary of the land trust, however, only the name of the Trustee is associated with the property in the county recorder’s office. Land trusts are nifty ways of keeping a property owner’s and beneficiary’s status shielded from the public eye.
• Tax benefits
Property placed in a land trust may be taxed by that initial transfer, but there are specific provisions in the Internal Revenue Code providing for exceptions. In any event, all subsequent transfers occurring thereafter to successor beneficiaries while the property is held in trust are shielded by the trust from further taxation.
• Simpler transfers
Trust agreements can provide specific terms regarding how and when property is to be transferred and the Florida Land Trust Act accommodates for multiple beneficiaries and the various ways they can share title to the same property. Properly drafted trust agreements, tax benefits, and probate avoidance are all further reasons as to why transferring property held in a trust is much simpler than if it were held otherwise.
• Easy management
Property interests held in a land trust can be easily financed, sold, or otherwise managed without the formality of deeds, notaries, seals, or county recording.

There are a series of other benefits to hold property in a land trust. Our attorneys are happy to answer your questions and assist you in maximizing your goals through a land trust.

THE FLORIDA LAND TRUST ACT – §689.071, Fla. Stat. (2013).

Land trusts in the State of Florida are created by statute under the Florida Land Trust Act (FLTA). All land trusts executed in the State of Florida must comply with the terms of this statute. The FLTA addresses the specific rights, liabilities, and duties of trustees and beneficiaries, appointment of successor trustees and beneficiaries, applicability of other law and the Uniform Commercial Code, perfection of security interests, and the type of interests held by trustees and beneficiaries in land trusts, among other topics. Contact our attorneys to learn how your goals in a land trust are impacted by the FLTA.

Here is a link to the Florida Land Trust Act:
http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0600-0699/0689/Sections/0689.071.html

ARE ANY LAND TRUSTS NOT GOVERNED BY THE FLORIDA LAND TRUST ACT?

Yes. The Florida Land Trust Act lists four specific powers and authorities to be accorded to a Trustee in a land trust. If these powers and authorities were not accorded to a Trustee, the trust is not a land trust governed under FLTA.

If a trust was created before June 28, 2013, it will be governed by FLTA if the trust instrument confers on the Trustee the powers and authorities mentioned above and either expressly provides that the trust is a land trust or demonstrates the intent of the parties for the trust to be a land trust. If trusts created prior to June 28, 2013 state they are to be governed by chapter 736 or any other trust code or law besides FLTA, or the intent of the parties demonstrates so, the trust will be out of the purview of FLTA.

WHAT CAN I HOLD IN A LAND TRUST?

A land trust is intended to hold interests only in real property. This does not mean that you must have full ownership rights over a piece of property to place it into a land trust. The FLTA defines a beneficial interest as “any interest, vested or contingent and regardless of how small or minimal such interest may be, in a land trust which is held by a beneficiary.” Thus, leaseholds to mortgagee interests to full perfect title can be held in a land trust. Click here to read more about real property interests.

I ALREADY HAVE REAL PROPERTY IN ANOTHER TRUST. SHOULD I TRANSFER IT TO A LAND TRUST?

It depends. Any trust, including a land trust, can be revocable or irrevocable, and there are a series of advantages and disadvantages associated with each. Depending on the status of your current trust, your general donative intent, and, if applicable, your testamentary scheme, holding property in a land trust as opposed to another may or may not be a wise decision. Among other things, and revocability aside, holding real property in a land trust might be more advantageous if you are concerned with property being held under your name or if there are multiple owners or business transactions related to the property so as to keep the subject property in exclusive management under a single land trust. Call our office to learn from our attorneys whether a land trust is the best option for you.

HOW DO I CREATE A LAND TRUST?

There are two documents required to create a land trust: a deed and a trust agreement. When one creates a land trust, he or she transfers, by deed, real property to the trustee to be held in trust and executes a trust agreement that outlines who the Trustee(s) and Beneficiary(ies) are, the scope of the Trustee’s authority, and the general terms of the trust, including how the subject property is to be managed and among other instructions and conditions. The deed must be recorded and the Trustee must be conveyed specific powers and authorities laid out in the Florida Land Trust Act.

We encourage you meet with one of our attorneys to discuss the creation of a land trust. Given the particularity of the FLTA and its distinction from the ordinary Florida Trust Code, it is important to make sure a land trust is created properly and governed under the appropriate provisions of Florida law. Our firm can assist you with executing a deed in trust and trust agreement that will clearly outline the rights and duties of designated trustees and beneficiaries, fulfill your needs and goals, and properly manage any risk associated with your property.

WHAT IS A TRUSTEE AND WHO CAN BE ONE?

A Trustee is the person or entity responsible for managing the trust property. There can be multiple Trustees (or Co-Trustees) to the same trust. A Trustee can be a natural person or a business entity. A Trustee holds legal and equitable title to the trust and is the only person who can take any action concerning the property. A Trustee can only act under the direction of the beneficiary(ies) and has no authority to make any decisions concerning the trust property on his or her own accord. In essence, the Trustee is a fiduciary who holds legal and equitable title to the real property for the benefit of the beneficiary and acts according to the direction of the beneficiary assigned to the trust. The Trustee acknowledges that he or she understands the rights and responsibilities as a fiduciary to the Trust and beneficiary(ies) and, accordingly, that the Trustee should file I.R.S. Form 56 notifying the I.R.S. of the creation of a fiduciary relationship under section 6903 and giving notice of qualification under section 6036.

Our firm provides Trustee services for land trusts so you can ensure your trust property is managed by an entity that is responsive, reliable, and knowledgeable about land trusts and the FLTA.

WHAT IS A SUCCESSOR TRUSTEE?

A Successor Trustee is the person or entity who is next in line to serve as Trustee in the event the Trustee is unable or chooses not to serve as Trustee. The Successor Trustee has no authority or title to the trust while still a Successor Trustee.

WHAT IS A BENEFICIARY AND WHO CAN BE ONE?

A beneficiary is the person who holds a beneficial interest in the land trust. Unlike an ordinary family trust where the Trustee has mandatory or discretionary authority according to the terms of the trust, the Trustee in a land trust has no authority except to follow the directions of the beneficiaries regarding the handling of the trust property. This is what the Florida Land Trust Act calls the “power of direction,” and it rests only with the trust beneficiaries. The Beneficiary is also fully entitled to all beneficial interests of the trust property, such as earnings and other proceeds the property generates while in trust and the option to occupy or otherwise possess the property.

The beneficiaries of a land trust can be anyone the trustor (creator of the trust) chooses, even the trustor him/herself. It is usually in the best interest of a beneficiary to hold his or her beneficial interest in the name of a business entity, such as a corporation or limited liability company, so the beneficial interest can have the same protections offered those entities should the beneficiary ever face the risk of liability.

REAL OR PERSONAL PROPERTY INTERESTS – DOES IT MATTER?

One of the unique features of a land trust is the ability of a beneficiary to hold either a real or personal property interest in real property held in the land trust. According to the Florida Land Trust Act, any land trust conferring personal property interests to the beneficiaries must explicitly state so in the trust documents. If there is no specification as to the type of beneficial interests in the trust, Florida law will presume they are real property interests.

The main incentive for a beneficiary to have a real property interest in a land trust is if the trust property is the beneficiary’s homestead. Holding property in a land trust does not interfere with qualification for the homestead tax exemption. In most other circumstances, personal property interests are preferred. If the interest is personal property, beneficiaries can easily assign their interests without a deed, the trust property cannot be partitioned, and ancillary probate administration for out-of-state residents can be avoided. Personal property interests provide other tax and asset-protection benefits, as well.

HOW ARE TRUST INTERESTS PROTECTED?

Under the Florida Land Trust Act, Trustee and Beneficiary interests are “separate and distinct” from one another, unless another law specifies otherwise. Thus, any actions or encumbrances affecting one have no effect on the other.