What is a business trust? What is a land trust? (AYU April 2024)

Presented by Hayden-Anne Breedlove

A business trust is a legal arrangement where the ownership and management of a business is transferred to trustees who hold and manage it for the benefit of the beneficiaries. In order to form a business trust, Articles of Trust must be filed with the State Corporation Commission (SCC). Additionally, a business trust usually has a governing instrument which sets forth provisions relating to the business and affairs of the business trust. If this governing instrument fails to address something, the Virginia Business Trust Act  (Chapter 14 of the Virginia Code) will govern. A business trust may own real estate. More information on business trusts can be found in our “Entity Requirements – A Summary Chart,” located in StarsLink under “Virginia Underwriting Directives.

A land trust is a legal arrangement in which a trustee holds legal title to real property for the benefit of one or more beneficiaries. It’s formation generally consists of two documents: a deed in trust and a trust agreement, which is executed by the beneficiaries and trustees. Typically a land trust doesn’t operate a separate business but may manage the land owned by the trust as a business. Contact VAUnderwriting@OldRepublicTitle.com if this type of trust appears in your search and you have questions.

A certification of trust is not appropriate in either of these situations. It only applies to trusts established for estate planning reasons.