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How can I protect my privacy in real estate transactions?

Individuals 10.30.2019 5 MIN READ


There are many ways to hold title to real estate. How the title is held will affect how much privacy the owner will enjoy. The most common way for an individual to title property is in his/her sole name, whereas for a married couple, it is often as Joint with Right of Survivorship or as Tenants by the Entirety. This article explores ways in which to protect the privacy of the buyer.

The three most common ways to hold title to property for enhanced privacy purposes is either through an LLC, a revocable trust or realty trusts, also known as “land trusts” or “nominee trusts.” The main attributes of these structures, often referred to as privacy vehicles, are explained below, but it is important to note that an attorney should always be consulted, as various state laws impact how an LLC or a trust is structured and whether they are even permitted. In addition, an attorney should be consulted to determine if any of these structures will have an impact on the availability of the homestead exemption if a particular state currently allows for this tax benefit.

Limited liability company (LLC)

Once an LLC is formed, title to the newly purchased property can be taken under the name of the LLC and not the individual name. If the LLC consists of multiple members and if the property will only be used personally, an attorney should be consulted for any potential issues that could arise with LLC ownership. When privacy is a concern, it is important that the manager of the LLC be an unrelated third party as the public records may indicate the identity of the LLC manager. In that situation, the LLC name and not the individual name would appear on the public record and in the chain of title, as well as the deed, mortgage and real estate tax bill. Similarly, if the LLC should rent out an investment property, then the lease can be between the tenant and the LLC rather than the tenant and the individual owner.  However, it is important to note that if the real estate purchase is above a certain dollar threshold, certain states require public disclosure of all LLC members.

In addition to an LLC potentially offering privacy, there are several other advantages that may apply. Although a single-member LLC does not offer liability protection, a multiple member LLC may offer such protection if the property is held for investment or business purposes and if certain business formalities are followed.

Conversely, when property is owned in an individual name, all other assets of that individual are exposed. For example, if an individual owns two separate homes that are rented to two tenants (property #1 and property #2) and the tenant in property #1 sues the owner and is awarded a $one million judgement, then both properties can be used to pay the proceeds of the lawsuit, since both properties are owned by the same individual. If instead, each property were held in separate LLCs, then the LLC will act as a double layer of protection and it ensures that the individual’s other assets are not vulnerable to satisfying the judgement. 

Secondly, an LLC typically affords protection in the case of death, incapacity or divorce. An LLC will have an operating agreement, which is essentially a detailed contract that allows members to dictate what happens when a member passes away. The operating agreement can also dictate what happens in the case of divorce or if there is a dispute and one member no longer desires to have an LLC interest.

Lastly, LLCs are excellent vehicles for estate planning. For instance, a trust can be a LLC member, thereby allowing future generations to benefit from the underlying real estate held within the LLC. Outside of the trust context, fractional interests in an LLC can be gifted to family members without having to re-title the property deed. Gifting LLC interests may be far easier than gifting fractional interests in the property itself. 


Revocable trust

A revocable trust is a document that determines how your assets will be handled after your death. These assets can include personal possessions, bank accounts, investments and real estate.

Once a revocable trust is drafted, the grantor of the trust transfers over his/her assets to the trust. If real estate will be held in the trust, it is important that the property actually be purchased in the name of the trust, rather than having the grantor first purchase the property and then transfer it into the trust. This will maximize the grantor’s privacy. Once the purchase has occurred, the trustee is the legal owner of the real estate. Although the grantor can be the trustee of his/her own revocable trust, an unrelated third party should be the trustee if privacy is desired.  

Holding real estate in a revocable trust allows the owner to be discreet about his/her affairs. Most importantly a revocable trust avoids probate at the grantor’s death and the release of documents to the public.

Realty trusts

The main advantage of these trusts is the beneficial owners avoid having their names revealed in a public record, since the owner of record in the county files will be the realty trust. 

Since these trusts are driven by state law, be sure to confirm with an attorney that a particular state allows such trusts. Only a short declaration of trust is required to be recorded. Under these trusts, the grantor is also the beneficiary and is considered for tax purposes as having retained direct ownership of the property.

In terms of liability protection, a realty trust would typically not provide asset protection to any greater degree than holding the property in the individual’s name.

Additional privacy considerations

  • Mortgages on real estate held in a privacy vehicle
    As previously mentioned, mortgages are public record. When privacy is desired, it is important to confirm that the lender will allow all documentation in the name of the privacy vehicle and that any public record documents be signed by an attorney or another third party.
  • Property tax payments
    Some municipalities list the payor of real estate taxes in public record. Depending on the municipality, individuals should avoid issuing personal checks, or even signing checks from an account in the name of the privacy vehicle.

  • Property and casualty insurance
    When real estate is held in an LLC, it is important to confirm with the property and casualty insurance agent that the property will still be covered.



In conclusion, if an individual is trying to maximize his/her privacy when purchasing real estate, an LLC, revocable trust or realty trust should be considered. As mentioned, it is extremely important to consult legal counsel due to the state law issues that typically arise.

Amy Fanshawe is a senior vice president, Tax Policy & Research at Ayco.

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