Shhh! How to Privately Buy Real Estate

Want to buy real estate privately?

There are ways to increase anonymity, but it's important to be aware of limitations. Grant McKeehan joins us to explore strategies like LLCs, understand why trusts might not be the answer, and navigate the legal landscape.

Key Takeaways:

• Learn how LLCs can offer anonymity for property ownership, especially in certain states.

• Discover the limitations of privacy due to public record-keeping and the importance of consulting legal professionals.

• Understand the difference between member-managed and manager-managed LLCs for optimal privacy and control. 📈

Take your real estate knowledge to the next level by tuning into this episode!

Links:

Grant McKeehan PLC's website

Time Stamps

00:25 The Importance of Private Real Estate Purchases

01:53 Understanding Real Estate Deeds and Privacy Concerns

03:29 Trusts and Privacy in Real Estate

12:07 LLCs and Privacy in Real Estate

30:15 Delaware LLCs and Privacy

37:32 Conclusion and Final Thoughts

• Transcript

  Introduction and Guest Introduction

  Welcome to me financial the podcast designed to inspire your financial life. Hello everyone. And welcome to the podcast. I am Michelle Moses, your host. And today I have Grant McKeon here again, a lawyer. Um, I'm not sure if you heard our other podcast on wills and trusts, but I invited him back again to talk about.

  
  The Importance of Private Real Estate Purchases

  How to purchase real estate privately, meaning without your name on it. I think this is a timely topic just because the social media, um, you know, anybody could get famous or be online and something could happen to you. You could get mad at somebody at Starbucks and then they could hunt you down. Right?

  So, uh, I was interested in this topic, so I invited Grant on. And so let me introduce him. Grant McKeon is the owner of Grant McKeon, PLC. He is And he went to the University of Kansas, Arizona State University, and the New York University School of Law for Taxation. He prepares wills and trusts, where he regularly advises clients on federal income, estate, and gift tax laws.

  He has been practicing law in Arizona for 18 years, and he is originally from Kansas City. Just like myself. Go Chiefs. He's your Chiefs fan, right? Still? Don't forget the Royals. Although the Chiefs are only on Peacock this weekend. I'm not very happy. I'm not very happy about that either. I don't know.

  Patrick Mahomes pulls more people in than that. So anyway, we could have a whole nother podcast about that as I'm sure there is. Yes. Anyway, so we are going to be talking about And this, Grant, when I asked him this, he was asking, you know, I was asking about purchasing privately and he's like, Oh, I don't know.

  So his first question on his notes is, is it still possible to privately purchase a home in the information age? And so let's get started with that. Is it still possible to do? Yes. Fortunately, I am glad to hear that.

  
  Understanding Real Estate Deeds and Privacy Concerns

  We live in a world now where You may not realize it, but if you sign a real estate deed, either to sell your home or to purchase a home, that real estate deed is in most states and counties going to be digitally imaged and available and searchable by your name on, you know, your state or your particular county recorders website, uh, and where you live.

  is probably also available on your particular county assessor's office website or treasurer's website. If someone just wants to look you up by name and find your address or maybe even find out what you paid for your home. Or what year you bought it, or how many square feet it is, how many rooms it is.

  What the layout is, you can find all kinds of things on there. Right. So in my world, for those of us that are legal professionals or work in title companies, escrow companies, This is a thing of beauty because this information we need often, uh, in our careers is so easily available and free. Um, even if you're looking for a property out of state, however, uh, it does create issues, which is that now all of that information is out there for anyone, good actor, bad actor that wants to get ahold of it.

  Um, and so the question is, is there any way for us to help you buy a property? privately and keep it private.

  
  Trusts and Privacy in Real Estate

  It's one thing to say, Oh, my trust bought it. My LLC bought it. That's great. But are there, is there a paper trail? Is there a way for someone to find out all of this information just using the internet?

  Because even if you buy it in an LLC or a trust, then there could be a paper trail. And a lot of people just name their trust, you know, the Grant McKeon. Revocable trust, right? Yes. And is that what you normally advise people to name? It is their name. Yes. Or their initials or, you know, uh, a name they like, um, Alacadabra trust, trust the, but why do you, why do you advise?

  And I've always wondered this. So it helps identify the trust, for example, if you're opening a bank account, um, in the name of your trust, it perhaps makes it easier for bankers to identify who the owners of the trust are. Um, but you know, if you have a common name, there's probably multiple trusts in your name.

  And so you can use. any name you want, the shorter, the probably better, you're going to use it all the time. Um, and as we'll talk about with property ownership, you know, if your trust name includes your name, then, you know, there isn't any privacy. Right. But if you've chosen a unique name that, that does not include your name or your business name or your nickname, then maybe you've been discreet about it and maybe you've hidden, uh, ownership of your home.

  Right. Okay. I could see that. But then if, so we'll get into this. So, uh, because sometimes you can then track people based upon, even if it does say the abracadabra trust, we'll go with that. I like that. Uh, better. I would have said the supercalifragilisticexpialadocious one, but it's abracadabra is a little bit, yeah.

  It's a little shorter, uh, that you can, you can then find a paper trail from those trusts. That's correct. Right. So if someone purchases a home in their name and then maybe as part of their estate planning, they decide to deed their home into their trust, which is a common estate planning technique. The issue is, um, even though the trust is now listed as the owner of the home, if someone wants to find out.

  If you, you know, what, where you live, they can put your name into a county recorder's website and they will find the deed that you signed when you transferred the home from you to the trust. So there is a paper trail. Okay. And as we'll talk about later. To maintain privacy and home ownership, my recommendation is that the entity you select to be the purchaser be the original purchaser of the property so that we don't have this paper trail and that someone with time on their hands can follow the steps and say, Oh, wait a second.

  This is this is actually their home. They've just put it in the name of this fancy trust. Yeah, and they did it on such and such date. Correct. Okay. Yeah. Because I mean, these deeds, I don't remember how many years our county recorder goes back, but off the top of my head, you can search for deeds that were recorded up to like 30 or 40 years ago.

  Um, so there's quite a bit of time back. I think it's even longer than that. I had a neighbor who bought his house in 1956 and I was looking at some 1960s stuff for her. Yeah. So it goes back really far. So it's very comprehensive. It's a little crazy. Yeah. Um, and. And anybody can get on there. Right. And search.

  Okay. Right. You don't have to have a membership or anything like that. No. Okay. And this is the case in a lot of states and a lot of counties. Um, whether you want to look it up. for tax records to see what the property taxes are. It's usually searchable by name or if you're just looking for property ownership records.

  Most counties in the United States now have this available. Okay. All right. And that's what worries me is because anybody that really, really wants to. I'm not gonna say hunt you down, but really wants to find out where you live and where if you own something, then they could do this. And so the important part is if you do want to buy a home privately, it's to that you're needing to start this at the purchase at the time of purchase, not after you purchase it.

  And so I've always heard sometimes too, that when people are going to purchase a house, that the, it. the day of closing that they'll put it into their house and then they'll basically like quickly put it into the trust is and they used to do that but do they do that anymore is is that kind of how it works that's a common question okay um we have we often kind of have this hokey pokey situation where we have the house and the trust and then do we need to take it out if we're going to refinance and so it depends on the lender but if you If you don't have a trust, um, yes, you're obviously going to purchase it in your name or in the name of you and your spouse.

  Um, if you do have a trust, then I like it for the trust to be the original purchaser. What it comes down to though, is the mortgage issue, the financing issue. So some lenders will, Um, permit you to use your trust to purchase your home, even though you or you and your spouse are the borrowers under the mortgage, the trust is rarely going to be the borrower.

  It's, it's often the individuals that have created the trust that are the borrowers. So depending on flexibility, and if you do have a trust and you want it to be the purchaser, then I suggest you disclose that to your realtor and to the lender. Okay. that you want the trust to take title and usually that they can work the paperwork around that.

  Okay. And so, but they would still be able to search you though because you as the trustee of the trust would be signing those documents. And so just, it doesn't really create that much privacy. Am I right about that? Exactly. I mean, sadly, I have had clients where we have named their revocable trust either with an acronym or with a special name like abracadabra.

  And the assumption. Is because the trust name doesn't include my name, Grant McKeon, then that must mean that when I purchase a home, it's going to be private and no one will be able to find out that that's what I bought. Well, not so fast, my friend, because if you have signed the deed, um, or if you are, you're the trustee, then that information is probably, on the internet.

  It's either on the recorder's website from a deed or it's on the assessor's website. So, and when, even if you're buying it in a trust, so those, you know, searchable like white pages and all those kinds of like, find a person websites. Do you have any idea if they would search it? Do you know what I mean?

  Like if you're just signing it versus if it's, that's probably a complicated question based upon whatever the website is. No, I mean, the, the, I think the general rule with a lot of these people find our websites, if you will, is that it's just kind of by, by volume. So the more volume you have, the more information you have out there with your name connected to an address, the more likely it is that they're going to catch it.

  They're going to pick up on it and then they're going to republish it on their website. So this whole idea I'm talking about today, which is privately purchasing your property, the, the point is to disconnect your name from the address of the home you live in or the home you own. We want to separate those two items so that they're not clumped together and then broadcast and repeated and republished all over the internet.

  Okay. All right. And so, um, it sounds like buying it in a trust, you're still, your name is still on it. And I can say just from a real estate perspective, if you wanted to cut down on mail and getting like mailers from a title company or real estate agents and things like that, that would probably doing it in a trust would cut down on it because you, they would just be mailing to a trust and it's a lot more, um, informal.

  And I think, uh, some people don't mail to that and I can't speak for all agents or all title companies or, you know, You know, anything like that. But, um, you can download lists and say, who lives at one, two, three main street. And it will say the name of the trust or whoever purchased that, not who was signing the documents.

  Um, so I think that can also provide some, you know, level of security or maybe, um, deterrent for getting some mail. Cause they know that you want to keep things private. Yeah. Yeah.

  
  LLCs and Privacy in Real Estate

  Um, okay, so let's switch over then to buying it in an LLC because those are the two options, right? If you want to have it be private is you can be in a trust or we could have an LLC and you can do it.

  Um, obviously, we've all, I don't know if everybody, but we've heard of Delaware LLCs. Um, I was just looking, um, online a couple days ago and I asked Grant before we even got started that somebody was touting Dua Montana LLC, you know, so all these different states, um, have different laws for their, um, limited liability corporations.

  And, uh, you can set these up, right? I mean these take a while to set up. I mean, it's not like you can just set them up in a day. So you gotta be thinking we, you know, here in Arizona, we do have expedited processing, but it's pretty expensive. I think it's 400 for same day processing and 200 for second day processing.

  But yes, I mean, it can take a few days, if not a few weeks. Okay. Don't you have to publish it in the newspaper? It depends on the, um, at least here in Arizona, it depends on how many people live in the county, as odd as that may be. Uh, for example, here in Maricopa County, we do not have to publish the articles of organization because the information is automatically published.

  By our government, but it doesn't matter. It doesn't need to be publicly. Okay. Sure. But in other counties and in other states, publication of business formation is common. And so, uh, as a listener, you may, uh, if you want to set up a business entity, you may find out that it, that, uh, Uh, it needs to be made public or at least the name of the entity needs to be made public by law.

  Okay. And so setting up an LLC to purchase a property, we'd probably still be going through the same thing. You don't want to put your name on it. Don't be, you know, Chad Smith. If you're looking for anonymity. Yeah. Name it the abracadabra LLC. Uh, and then, so my same question though, I guess, is if you do name it the Abracadabra LLC and you are signing your name as the, uh, manager of the LLC, then that, that just kind of, it just is a deeper paper trail, right?

  You're going to one website to look at the deed and then you would go on another's website to look at, oh, who owns this LLC, right? So at the very top level, you know, if you have Abracadabra Trust or Abracadabra LLC, Well, that doesn't tell me that Michelle Moses is the ultimate owner. Um, but what we're talking about is it's a little more subtle and it involves the paperwork, which is the world I live in.

  You know, my law office is all about paper. Um, so yes, if you set up the LLC, the LLC has to have members, which are the owners, and then if it's manager managed. So who are those people? Um, if it's you, then you haven't accomplished any privacy. Um, but as we'll talk about, if you use a trust and if you have someone in your life that you trust that could be a third party manager, if you will, then your name is not on that LLC paperwork.

  And who, would you hire? Could you hire a company? I mean, what do celebrities do? I'm very interested in this. Do you know? I do. I have limited experience in that, um, without saying any names. Um, you know, celebrities have managers. And, uh, or publicists. And so they have those people as the manager of their trust or of their LLC.

  They might. Okay. Yes. Okay. And they would trust that person that much? Or I would imagine there's just a lot of legal paperwork that goes with that. Well, I think you've raised a really, you hit on a very key point there, Michelle, which is. You do really have to trust someone if you're going to put them in control of a home or a rental property that you're going to purchase.

  And so if you've come into my office and you already have that relationship, then you're probably going to be all set. Because even though your lawyer can draw up paperwork to try to protect you from a bad actor, oftentimes it's going to be too late. And you're going to be chasing, you know, good money after bad if someone has hurt you by committing fraud or deceiving you or acting badly as the manager of your LLC that you set up to privately own your home.

  So, when I say it's a key point is if you want to accomplish this, you really do need to have someone in your life that you 100 percent trust to help you keep this private. Because the whole name of the game is keeping your name off of all of this legal paperwork and all of these filings with the state and the county and the deeds and so, um, this can't just be someone that you might think can help you.

  They've got to be a trusted person. And so when you're setting up an LLC, or even if I guess building on this, if you had a trusted person that was the. Manager or the member of the trust. And we haven't even gotten into that. So I'm sorry that I'm confusing everybody, but, um, it was basically the manager of this LLC, then they could go and just sell your house because the LLC owns your house.

  Yes. So you're, so that's why you would definitely need to trust them that they wouldn't sell your house out from under you. Right. And, um, there's a couple thoughts on that one. And hopefully this is educational for everyone, but here in Maricopa County and many counties around the U S they now have these property alert systems where you can sign up.

  It's voluntary in most states, but you can sign up and register your home. address to receive alert emails or maybe even texts if anyone records a document with respect to your address. And this goes into the title fraud, which is an episode we just did. So this would build on that. So if a bad actors out there, that's going to forge your signature to try to obtain a loan and pledge your home for the loan.

  Or in the example you just gave, which is, Oh, I set up my LLC so that I could keep my home private. But now I've got a manager who's gone rogue and they're trying to sell my property. You know, signing up for this alert system is a good idea because then you'll know if there are any documents recorded immediately and you can contact your lawyer or.

  Law enforcement or whoever you need to reach out to whoever to be contacted. Okay. A Superman, someone to come help me. . Yeah, .

  
  Setting Up and Managing LLCs

  So let's back up a little bit about the LLCs. 'cause there are two types of LLCs here in Arizona. Um, and is this normal? I mean there, is it different in every single state? I mean, are they.

  Like, is this kind of a normal thing of what we do? I'm just wondering for the other people that live in other states, so is by going over this, are they, is it maybe going to be able to apply it? You know, manager managed, uh, the management, what we're discussing is how, how is an LLC managed management structure, right?

  Right. So we have a couple of types of, of management manager managed or member managed LLCs. And yes, many other states have those types of LLCs. Okay. Um, okay. So the first type is member managed. Right. Okay. And so you set up an article, articles of organization for this LLC. Which is now going to be a public, remember a publicly searchable document.

  Yes. Someone can go on the internet and look at a copy of the articles of organization. Yes. And so then the name of that and address is on there for each member. So if you were going to say buy real estate with your mom and dad, you would probably have yourself and your mom and dad as managing or as members of this LLC.

  Uh, am I missing anything there? No, if, if, if it's, if it's set up as a member managed LLC, then you are correct. Those articles of organization must disclose the names and addresses of the members. And we can't get cute with us because at least in our state, if the. Members change, then you are required by law to update, amend the articles of organization to reflect the new members' names and addresses, and then that becomes a public document again.

  Again. Yes, correct. Right. So this, so the member, the member managed L-L-L-L-C. You are having to disclose ownership. So that's no bueno if we're trying to keep this private and own a home. And then we'll all see. Okay, so the second one is manager managed. And that's the one that we've been talking about the most is, you know, if celebrities were to have a manager, Uh, that would be a third party that would not be theirs, but the articles of organization again are public and so, um, explain to me how there's a manager and there's members of this LLC structure.

  Absolutely. So with an LLC, the, uh, you know, the analogy would be a corporation. Corporation has shareholders. We own a share of stock, so we own part of the company. LLCs don't have shareholders, they have members. It's analogous. So if I'm a member of an LLC, I don't hold a share, but I hold a membership interest.

  And that could be in the form of shares, or it could be a percentage, however fancy you want to be. But if you're a member, you own either all or part of the LLC. LLC. If an LLC is member managed, then those members, those shareholders, if you will, they are in control of operating the LLC. However, if you set it up as a manager managed LLC, then the members are the shareholders, and they have the equity, they're over here.

  But then there's one or more managers that are identified could be members, but they don't have to be members. They could just be third parties that are in charge of running the LLC and signing paperwork for the LLC. So why would you have a manager with different members? Oh, you mean a manager that isn't a.

  Yeah, like manager would be Tom. And then you've got Sally and Joe as, you know, members. Okay. Maybe because, um, you know, Tom has experience, uh, running real estate companies or real estate investments and Sally and Joe just, you know, want to sit back and invest and and, uh, be the members and they don't want to be involved in the day to day management of the company.

  They don't want to be bothered by their picky attorney. That's asking them to sign paperwork all the time, and they want Tom to handle that. But they want to make sure that they have a financial interest, which would basically mean they have the legal interest at whatever percentage they own the LLC.

  Yes. And they can, they can replace Tom. If he. Yeah. Is moving on, or if they aren't happy with how he's acting as manager. Oh, so they would have the, the ability to change the manager? Yes. Oh yes. So the ma the members have it, the ability to change whoever the manager is. Yes. And so that's flexibility. Uh, we like that and.

  And that happens. So in the manager managed LLC, so the manager or the members can change the articles of organization? Um, well, the members would need to authorize the manager to do that. Usually it's, it's going to be in, in the form of like a consent. Okay. So, but really the members are kind of in charge there.

  Yes. And you can use an operating agreement, which is just a legal agreement, uh, that That defines the roles and the scopes and responsibilities of the members and the managers. And, um, that's one way that the members can, uh, you know, control, if you will, what the manager can and can't do. So in this context, we like a manager because again, it's a third party that is not the ultimate owner.

  And so if that third party is their name is on the LLC paperwork, or if they're signing LLC paperwork, then you're not disclosing the names of the owners. Okay. And so then how would you, so if you're wanting to buy real estate privately, you would have a manager member at LLC with a third party manager, someone that you, that you trust.

  Yes. And then who would be named as the member? Because you can't name yourself. Otherwise, then you're leaving a paper trail that I am Oprah buying this house. That's right. You're Oprah and you're investing in, in Arizona. Um, so the, and again, every state is different. Um, but here. If you have a member managed LLC, as I've said, you have to disclose the names and addresses of all of the members, even if you only own 1%.

  On a manager managed LLC, the rules are different, and this is where we have an opportunity for privacy planning, which is The manager's name and address has to be disclosed to the state on this article's filing, but you only have to disclose the names and addresses of the members that own over 20%. Now, in most cases, if you're buying your home or your investment property, you're going to own 100 percent of the home or of the LLC.

  Um, and so how do we, what can we do? Well, we can use a trust as the member rather than you individually. And if the trust name is again, something off the wall, unique, that doesn't identify you, then no one can trace your ownership of the home back to the LLC because we've disclosed the member, which could be ABC trust.

  And then we've disclosed the manager, which could be, you know, a third party. If, if Grant McKeon is the manager of Ms. Michelle Moses, LLC, if you've never watched this podcast, then you wouldn't know that that she could be the owner, but you wouldn't know that there was any connection between the manager and and the owner.

  Okay. So then there would really, so you really could buy a house privately if you set up an LLC with the trust. Yes, even in Arizona where our state has these disclosure laws. Um, we've already gone ad nauseum on the disclosures for articles of organization, but just to put a cherry on top, every deed that gets recorded here, when you're buying or selling a home in Arizona, If the, if a trust is the buyer or the seller, the deed must disclose the names and addresses of the beneficiaries of the trust.

  Now, it's not as burdensome as one might think because most of the time, if you have a trust, um, the current beneficiary is you. Okay, so we're not having to list every single trust beneficiary that could possibly inherit from this particular trust. But, again, the deed itself, if your home is in a trust, even if it has a crazy name like Abacadabra Trust, if you, when you go to Buy in the trust or sell from the trust.

  The deed itself has to list the beneficiaries and so that fancy name you've used to try to keep this private isn't going to help you when you have to put your name or your and your spouse's name on the deed when you're selling it or when you're buying it. And so that's why in Arizona, um, trust acquisition or sale of a home isn't necessarily private.

  Right. But, but if you had a trust with the manager LLC, then it could be private. Yes, because if the LLC is the owner of the property, Then, the deeds are to and from the LLC, not your trust. Your trust simply has the equity. Your trust owns the LLC. That happens all the time. Um, that's not unusual. And if it's a revocable trust, it's not going to trigger any crazy tax issues.

  Um, but yes, uh, whether you're a celebrity or simply an investor that wants privacy or someone who just owns their own property, And once some privacy, um, to use an Arizona LLC, you're going to need to find someone that you trust to, uh, be your manager. And, you know, your lawyer can prepare an operating agreement that says what the manager can and cannot do.

  You could say that they cannot transfer the home without your written permission. Um, but again, that's all legal documents. Um, and, and, and so they hypothetically could do something without your permission. And now you have a mess. Then you'd have to sue them with those legal documents, basically. Yeah.

  
  Delaware LLCs and Privacy

  So what's the, what is the hype about Delaware LLCs?

  I mean, you see these all the time. So why do people get. So generally speaking, Delaware is known to have very favorable corporate laws. Um, they like to attract business to their state and their, their set of corporate law is part of, of what's attractive about doing business in Delaware. Um, my understanding is that.

  In Delaware, when you file the articles of organization to set up a Delaware LLC, unlike Arizona, the names and addresses of the members are not required to be listed on that document filing with the government. And as a result, um, your ownership of a Delaware LLC may be more private than your ownership of an LLC formed in another state.

  So they don't even know who owns an LLC. Um. That's interesting. So what if something happens and they don't know who owns it? Do we know? Well, I suppose in a lawsuit scenario, you have subpoena power. Uh huh. Um. And perhaps the manager, again, I don't practice in Delaware and I don't set up Delaware LLC, so I don't know the answer, but maybe the manager has an obligation to disclose that information at some point, but when we're just talking about on the surface, kind of what is the basic information that these government entities require to be provided to own a property or to own an LLC, I don't know.

  People like to use Delaware LLCs. And as you know, where we live, I won't name the newspaper, but a certain newspaper in town loves to publish the most expensive home purchases and sales in our town that are always millions and millions of dollars. And this gets published weekly. And oftentimes it's someone with a Delaware LLC.

  Um, but it's just the name of the Delaware LLC. So they've won, right? Because we don't know who the real owner was, but just this week that newspaper published their list of the five priciest home purchases and sales. And one of them was a out of state LLC. But they identified the manager by name. And so if that's, if that isn't a celebrity or it isn't you, then it's a nothing burger.

  But, um, again, at least even our local newspaper is going to do the due diligence to not only identify. The name of the buyer and the seller, but to take the next step and say, oh, it was an LLC. Well, let's go see. Let's see who own the llc. What names are connected to the LLC, right? Oh, that person is the manager.

  Let's publish their name. Okay. In the newspaper. Well, so obviously we don't need to worry about this if you're not a celebrity, but I was just more worried about it just with online stuff. 'cause you never know. I mean, you could just make a random comment on, you know, Facebook or something and then people are jumping down your throat about it or something.

  If somebody got really vengeful. So that's why I wanted to have this topic. So it does sound like that you could at least, um, shield yourself from a lot of havoc and then if you were a celebrity, then obviously you would hire the right people. Or if, you know, um, I've had people approach me that are in a scenario where they do have a very expensive home that's either going to be bought or sold and they are concerned.

  They do not want their name in the newspaper. For a number of reasons, maybe not even anything to do with privacy or safety. They, they simply just do not want that information public.

  
  Legal and Tax Considerations

  Um, I should say that, um, you, we, we, I don't want to create a tax problem for you by doing this privacy planning. So if you do set up an LLC, You do want to ask your accountant or your attorney that helps you set it up to have it taxed as what the IRS calls a disregarded entity.

  A disregarded entity means just what how it sounds. The IRS is just going to ignore the entity for tax purposes. Now, why am I blabbering on about this? Because we all have these capital gains exemptions. When I sell my primary residence, if I'm unmarried, I can exclude up to 250, 000 of gain from the sale of my home.

  Um, great. Um, but if you've put your home into a business entity, then do I still get to claim my 250, 000 capital gain exclusion? Well, the answer is maybe. Um, but if your LLC is a disregarded entity, most tax advisors seem to think that that is okay and that you're still going to be able to exclude the gain even if you've owned your primary residence, not in your name, LLC.

  Okay. So just one tax caveat there. And one other legal caveat. which is most states. Well, some states have a homestead exemption, meaning that by law, some amount of the equity in your house is protected. Even if you have a bankruptcy or even if you get a judgment against you here in Arizona, our homestead exemption has recently massively gone 150, 000 for a long time.

  And all of a sudden, now it's 400, 000. But the statute says that a person or a married couple gets one 400, 000 exemption to protect 400, 000 of equity if they lose their home. It may not protect you if an LLC owns your primary residence. So if you own your house in an LLC and you file for bankruptcy or you're sued, you, your house value, your, the equity in your house would not be protected.

  It might not be. It's, I don't want to say definitively one way or another, but the statute talks about a person can have a homestead exemption. So it's not clear yet. No. And so, um, that might be a reason why Even if you use this LLC procedure to privately purchase your home, you then need to think about, do I want to keep the home in that LLC, or do I possibly want to transfer it to a revocable trust?

  that I own that would be eligible for a homestead exemption if you think you might have creditor issues in the future. So a lot of people won't, a lot of people that are going to pay cash for a house that are going to even be concerned with this aren't going to have creditor issues, but I just want to mention it.

  Okay. All right. So there's a lot of caveats. Obviously, I feel like with any law, when you're talking about wills and trusts and LLCs, it's just It's smart to call a lawyer like Grant, honestly. I think this is good to just know what there is out there, but if you have a very complicated situation, it is important to call the experts so that you know what you're doing, but I'm really glad to know that you could, it is a possibility to buy a house.

  I was just because I was thinking with everything that there is online that you have to disclose and all the articles of organization. And just from what I know, I was thinking that you couldn't do it. So I'm very glad to hear that you can. Thank you. Yes. I mean, everybody that works in this space, law, if you work at a law firm, if you work at a title company or an escrow company, or if you, uh, you know, regularly deal with LLCs.

  You realize that, that there's so much paperwork and, uh, and a lot of this paperwork is public and I try to tell clients all the time that when they sign a deed or when they sign LLC paperwork, I let them know this is going to be publicly available. I know we are. The work we've done is to help you accomplish your goals and we're going to sign it and we're going to make it official, but I want you to be aware that it's going to be anybody can search your name and they're going to be able to see what we've done.

  Uh, and that doesn't apply to all legal paperwork, but it does apply to these real estate deeds like we discussed today. So just know that. There is a lot to it in terms of the paperwork that's out there. I, and I do have a question just because I did a podcast on title fraud, uh, just last week. And, uh, my question is, do you think that the states need to update just with given how sophisticated some, uh, people are getting?

  Do you think that they need to update these disclosure laws or at least zero out the signatures or something like that? Just in your opinion. Oh, it's a great question. Um, the title fraud that I'm aware of that has gotten publicity here in Maricopa County pertains to forgeries. And so, um, it's become very easy to copy signatures.

  in connection with title fraud. Um, the, to answer your question, I do think that in the future, there may be restrictions placed upon the ability to access these documents on the internet. When we search, We search in a lot of counties and there often are long warnings and disclosures about what you can use the information for and what you can't, but a lot of people treat those just like your iTunes terms and conditions.

  Okay, where do I click except let me just get through this. They don't read them. They don't take them seriously. Yes, I do think in the future we may, that information may become more restricted. Um, but for now it's the wild west. It is. And it does take the government a while to catch up. And I realized that, but maybe even just redacting the signatures or requiring a membership site or, you know, something like that might be.

  Um, I don't know what the solution is, but I just thought I would ask you. Yes, it's very easy to find this information now. And, um, uh, for some people, um, you know, and, and, and we didn't touch on this, but, but obviously there are scenarios where government officials, law enforcement officials, if they take the initiative, they can have their home ownership information sealed, if you will, so that it isn't searchable.

  And I have. personally interacted with that, uh, which is, Oh, this person is of high public office. And yes, they own a property and no, their name is not on their property. And you say, Oh, wait a second. Um, but there has been an exception made for their safety, perhaps because they're a public servant. So there's that aspect of this as well.

  Okay. Interesting. All right.

  
  Conclusion and Final Thoughts

  Well, Grant, thank you so much for being on. I appreciate all this information. I learned something. I hope you guys all learned something out there and thank you so much for listening and let us know if you have any questions. Be sure to share the show with the circle of friends if you, uh, care to and leave me a review.

  Thank you so much.

Disclaimer: The information provided in this podcast is for general informational purposes only and should not be construed as professional financial advice. Always consult with a qualified financial advisor or professional before making any financial decisions. The hosts and guests of this podcast are not responsible for any actions taken based on the information presented.