What is a disadvantage of a land trust?

The correct answer highlights a significant aspect of land trusts related to transparency and disclosure requirements. In a land trust, although the structure allows for the privacy of the beneficial interest holders, local jurisdictions often mandate that actual owners be disclosed, particularly during zoning changes. This requirement is important for maintaining public awareness and involvement in local land use decisions.

When a zoning change is proposed, the community and government bodies want to ensure they have information about who ultimately holds ownership rights to the land in question, as this can impact local development, services, and the environment. Therefore, while a land trust can offer confidentiality regarding individual ownership interests, it does not exempt beneficial owners from the obligation to disclose their identities in situations like zoning adjustments, which ensures that the interests of the community and regulatory bodies are protected.

The other choices involve characteristics of land trusts that may not necessarily present disadvantages. For example, confidentiality of beneficial interests is often viewed as an advantage, as it can protect the owners' privacy. Moreover, the ability to divide beneficial interest into smaller units and the notion that a land trust can be a substitute for an agreement of sale do not negatively impact the function or efficiency of a land trust. Understanding these dynamics is vital for anyone engaging with land trusts and their implications in