How You Can Sell Property and Still Own It

It sounds unlikely, but when you’re doing an asset search you have to embrace the truth that a sale is sometimes not a sale.

It all comes down to one phrase: Beneficial Ownership. That means that you own something not personally, but through a different legal instrument that you control.

I’ve long argued that if you are doing an asset search and you’re not concentrating on side companies controlled by the person under investigation, you’re not doing your job.

Here’s how it worked in a recent case we had: An attempt to find an individual to serve him in a court proceeding, but also to find out where he could be storing a large piece of equipment he had decided to stop paying for and also had decided not to give back. Our client had the right to repossess the thing if we could find it.

Finding the one property the debtor owned and probably lived in was easy, but the equipment wasn’t there. Where else could it be?

It turned out that this guy had sold the lot across the street from his home last year. He sold it to a company that was 1) Based at his house and 2)The sale price was one dollar.

You don’t need an advanced degree to see that this was probably a sale to his own company. A quick look at the county tax assessor site revealed that the $1 lot contained … a garage, perfect for storing this piece of equipment.

But we were not done. This guy’s company owned six other pieces of property. Five of them were old residential addresses that came up in databases, but a sixth did not come up in databases because his company had bought it not from him but from someone else.

What was on this sixth piece of property? Another garage.

It took one hour.

Not only was this a great study in beneficial ownership, but it also illustrated another element in fact investigation: The ability to think creatively by playing the odds. We couldn’t prove the company was his, but kept going to find that second address.

The databases didn’t have the address because they don’t guess. If they don’t know for sure it’s his company and he’s never been personally linked to the second address with a cell phone or utility bill, they will often just leave it out.

One day, artificial intelligence may take care of this problem, but it hasn’t yet.