There are two types of land trust. The first is a non-profit organization, which is established to help preserve, protect and administer the lands of a publicly accessible area to which it has been granted stewardship, usually by the action of a community at large. The second is an agreement by which a parcel of land or other real estate property is controlled by one party for the benefit of another party. In this case, the first party holds ownership of the land and its development or other use is dictated accordingly with the benefits or proceeds of such development or usage being the granted possession of the second party.
For the purposes of this piece we will be discussing the latter of these two. This is often referred to as “ownership trust” and in the United States the version of such most commonly in use is the “Illinois type” which states that in order for the trust to be valid, the trustee must have in place not only the intention and ability to develop or for any other means utilize the land, but also must have a minor duty to perform in service to the actual owner (the beneficiary) such as to deed the land and its possession, up to and including all reasonable profits and improvement thereunto, to the beneficiary after a prescribed period of time. This type of trust comes from England, specifically the law of trust as regarded by the Statute of Uses, which was found to be valid by the English courts not long after the king enacted it. The opinion of the court was, however, that the statute can only be considered true and thus the trust valid if there is some action taken on the part of the trustee other than merely the holding of the land on behalf of the beneficiary and that the holding itself may not be in any direct cause to the commission of or indirect support of any illegal act.
The earliest accounts of land trust being in use can be found as far back as Roman times. During the age of King Henry VIII one of the greatest advantages of being a full citizen was the ability to own land. The only problem was that any able bodies, virile man who was a land holder had to serve in the military for a period of time. In order to get around this people would often use a land trust, thus being able to hide their true ownership of the land and not have to serve in the armies.
In more modern time the first real usage of land trust to any extent was in the early 1900s in Chicago. In this case, city leaders who were legally barred from voting on any projects which they would have the benefit of having approval authority over were able to use land trust to hide their true ownership of large amounts of land in the downtown and center city areas. These were of course prime pieces of real estate and were in high demand due to the booming popularity of building sky scrapers at the time.
These are only two examples of how ownership land trust has been used over the course of history. Land trust in itself is not a complex mechanism, but the practical application of it can at times be highly intricate and open to the interpretation of the prevailing judiciary at the time.