TRUST

A trust deed is constructed in the standard form and if a company is used, requires an NCSC approved prospectus before the units are offered to the public. The subject property and related assets are held in trust. The diagram below shows a typical trust structure.

Trusts are often used to assemble equity funds for real estate investment. Real estate investment trusts sell shares to small investors and use the proceeds to acquire or develop real estate.

HOW A TRUST WORKS

ADVANTAGES

• allows parties to invest in property that would normally be out of their reach
• by pooling resources two or more parties can purchase more expensive real estate
• when used to purchase existing investment properties, will achieve earnings through future rents and capital gains.

DISADVANTAGES

• potential risks involved in investing a large amount in one property
• minor interest holders may be outvoted by larger interests.