Titles to real estate are the mark of a feudal economic system. In other words, if we rely on titles to land to identify ownership, then we can never own the land because it is truly owned by the tax collector and other lien holders.
We are moving more deeply into a society where the tax collector and banking system have become the gatekeepers for people who want to pay for and use the land for productive purposes. But it’s all connected to the fact that the cultural norms in our society are built upon transferring a clear title to land when we buy and sell. Insurance is based upon it, tax liabilities are based upon it and the perception of property rights and liabilities are based upon the title.
Imagine selling the “exclusive right of possession” to someone who wants to use your house? How is it your house? Well, it’s not, but because your name is on the title, the statutes give you the exclusive right to use it. This has made us slaves to the banking system and taxing authorities. What if you conveyed the title of your home into a limited liability company? Give it the same name as your street address, for example, a home at 123 Elm Street, is now titled in the name of “123 ELM STREET, LLC”. You then add a standard lease agreement into the LLC operating agreement and then “lease” the property to the next occupant.
But what about equity and appreciation? We must break this cycle, this is what makes us slaves to the banking system, we think we can gain money from holding title, when it’s all a fraudulent scheme conducted by the banking system to keep us running in circles. Forget about “equity” and forget about the title, once conveyed into an LLC, it will forever remain and only the terms of occupancy will change within the operating agreement, from one occupant to the next. As more people do this, less and less people will need to have mortgages as prices on real estate plummet.
As this trend continues, the prices of real estate will return back to the costs of construction plus labor and a contractor’s premium for building the home. The prices will not rise and fall with the banking system or the crooked “fed rate” system. No one will be concerned about selling the title anymore because no one will need a title to enjoy the occupancy of a home (or any property for that matter). But what about the property taxes and foreclosure?
Foreclosure for Taxes
Yes, the property tax collector can still foreclose if the property taxes are not paid. The foreclosure would transfer the title to a buyer of the tax lien debt (whether deed or certificate), so the title would change. And if the occupant could not work out a debt with the buyer of the tax debt, it would allow him to foreclose. But because there is little invested, no expectation of any windfalls from equity or appreciation, it would be just as easy for that occupant to find another deal just like it with another property, a new LLC and enter into the operating agreement just like before, the only loss being the costs of moving.
It would also allow the new tax lien buyer to hold the title in his own LLC and just continue like everyone else, sell occupancy and jointly control the title. This new arrangement would work for everyone. How would the occupant protect his interests in the property with insurance?
We can take steps to mitigate risks without insurance, as used in the traditional sense.
● Structural damage
Your house should be located and constructed properly. Don’t build in a dry river bed or below sea level, and build it well so it can withstand the appropriate level of weathering. Even with all of these precautions, there will still be some risk to structural damages, but you will have greatly minimized this risk with planning, building and re-building.
● Personal liability
Because your name is not on the title, you won’t have any personal liability. If anyone were to sue the owner for a physical injury, he would have nothing more than a judgment lien (assuming he won because there was no need to defendant against the claim) and the lien would eventually expire or be severed in another foreclosure (it would be uncollectible).
● Contents (chattels)
A renter’s policy would work perfectly to cover the contents of your home, it’s a lease agreement, nothing new. But you could install an appropriate security system and use vaults for certain items and locks on drawers, etc.
While steps can be taken to greatly reduce known risks for your property, they cannot be totally eliminated. But your need for traditional insurance should be greatly diminished accordingly, or it should be diminished enough to where you would be willing and easily able to set aside enough money to cover them yourself. These remaining risks can be covered in the operating agreement by all parties as well, not just the tenant or the co-party tenant.
Foreclosure for Mortgages
Using residential homes in this way would eventually eliminate the need or usefulness for mortgages. In fact, in the near future, as these ideas are adopted, I believe mortgages will be seen as a “very stupid idea”.
However, let’s say there is a mortgage, where the borrower is the LLC. It would likely a short term mortgage, more like a 7 year term, and a hard money loan (not from a bank). If the terms of the mortgage are not met, well, we already have laws in place to protect the lender. And look at the interests of the tenants, it would not be several hundred thousands of dollars in equity at risk, just some moving costs. In fact the costs of foreclosure, even uncontested, might be more than the value of the mortgage or the property.
I see this as a trend, people are already realizing that we can use property this way. Maybe we will be recording these operating agreements on the blockchain, but that’s another subject.