By Marc J. Chalfen

Illinois is one of several of States that utilize land trusts to hold title to real property.  A land trust is an arrangement where actual title to real estate is held by a trustee (often a bank), while the rights and conveniences of ownership are vested in a beneficiary of the land trust, who exercises management and control over the property itself.  The land trustee can execute mortgages or deeds to the real estate, upon the written direction of the beneficiary.  The beneficiary’s identity is not disclosed, and the beneficial interest in the land trust is considered to be personal property.  The beneficial interest in a land trust can be sold, pledged as collateral for a loan, or assigned, often in a more efficient and simple manner than would real estate.  Benefits from holding title through a land trust can include: privacy of beneficial ownership; some minimal protection against creditors’ judgments; succession of ownership upon death; and advantages or efficiencies in mortgaging or selling the land trust property.

Persons or entities purchasing or owning real estate in Illinois may want to consider the land trust alternative.  Lenders extending or enforcing loans secured by property held in a land trust or by beneficial interests therein, should also be aware of the nature of land trusts and their rights and remedies.