Warning: Are You Using the Correct Legal Paperwork to Protect Your Assets?

A very well-known real estate guru and national speaker from Atlanta (whom we will refer to as “Mr. X” since he is presumed innocent until proven guilty) is undergoing an intense and lengthy criminal investigation by the Federal Department of the Treasury, in association with the Georgia Attorney General’s office, for tax evasion and possibly fraud and other charges.

This federal and state criminal investigation was recently confirmed by two Special Agents from the Internal Revenue Service, Criminal Investigation Division, located in Decatur, GA as well as many other REIA groups and real estate promoters from across the country who have allowed Mr. X to teach and sell his paperwork and training to their members and students.

(PLEASE NOTE: The Special Agents contact information can be provided if you feel you have been defrauded by Mr. X or have any information that will assist them in their investigation.)

Mr. X allegedly uses a complicated series of land trusts, personal property trusts, LLCs, charitable foundations and non-profit organizations with layer upon layer of these legal entities to hide his assets, avoid lawsuits, thwart investigation and evade paying income taxes. 

Because of the growing controversy this federal investigation is causing within our industry, the validity of Mr. X’s training and paperwork, which he is very famous for, is being called into question and facing increasing legal scrutiny. Within the past week, rumors are quickly spreading that the validity of Mr. X’s land trust paperwork was recently challenged in court twice and lost both times. It has also been widely rumored for years that much of his paperwork fails to stand up in court when challenged. Many attorneys have ridiculed the paperwork that he authors, sells and promotes as a safe and easy way to buy and sell real estate since the results could be quite the opposite.

Despite this ongoing criminal investigation and increasing legal scrutiny which Mr. X apparently does not disclose to his students, he continues to sell his non-attorney legal paperwork and teach thousands of unwitting students each year how to use layers of trusts and other legal entities to conceal and protect their assets and avoid unnecessary taxes. As a result, many new and experienced investors may have the false sense of security that there real estate transactions are compliant, legal and insurable when they might not be.

When questioned earlier today (3/5/12), about whether or not students who use Mr. X’s training and paperwork should be concerned about the pending the outcome of the investigation and the impact it will have on them, Special Agent “H” of the IRS Criminal Investigation Division said “I strongly suggest they consult with their attorney about this matter” (paraphrase).

If you are using any of Mr. X’s training and paperwork, you need to be prepared for any legal challenges you may face in the wake of this federal and state investigation as well as any potential IRS audits or lawsuits that may arise.

If you feel you assets may be at risk, you should be asking yourself…

• Do you have an attorney to consult with that is competent in these seemingly complex tax and legal matters?
• Is your paperwork legal and was it prepared by a competent real estate attorney or at least reviewed by an attorney?
• What other professionals other than your closing attorney do you need on your team to ensure your paperwork and transactions are compliant?
• What title documents do you want to have at your closings to keep you protected as either a buyer or seller?
• What kinds of deeds are used to legally transfer title and when are certain deeds required to ensure title insurance coverage extension on investor’s closings?
• What is title insurance and when is it needed for investors?
• If the title to any of your properties were challenged, would your title stand up in court?
• Will your title insurance policy cover the loss of any of your assets due to legal challenges?
• Which kinds of investor transactions are generally insurable verse uninsurable and why?
• What is the relationship between your closing attorney and its title underwriters, and how does this affect investors?
• How are title insurance rates calculated in GA, and how has this changed in the past few years, and what changes do we predict coming soon?

If you would like to get these questions answered, as well as any other legal concerns you may have about your real estate business and personal estate, be sure to attend at the next Atlanta REIA Main Meeting on March 12 at 5:30 PM at the Atlanta Perimeter Hotel & Suites located at 111 Perimeter Center West in Atlanta at 5:30 PM.

Local real estate attorneys Craig M. Halperin and Jonathan F. Lyman, Managing Partners of Halperin Lyman, LLC will be addressing paperwork concerns, entity structuring, asset protection, trusts, title insurance coverage, closing costs and help keep you honest, legal and protected in all of your real estate endeavors.

Atlanta REIA Members can attend at no charge. Guests are welcome to attend and can RSVP Online for $10 or pay $20 cash at the door.