A Delaware Statutory Trust (DST) is a legal entity created under Delaware law as a trust that holds title to 100% of the interest in real property.

Investors acquire a beneficial interest in the trust, with limited personal liability for the underlying assets. DSTs differ from Tenancy in Commons (TICs), another 1031 Exchange fractional ownership strategy, in that each investor does not own a fractional, undivided interest in a property as a co-owner. Therefore, DST investors are not required to share the associated costs of ownership, or be considered “tenants in common.”

With a DST, investors must keep the following things in mind regarding control and liability on the assets in the exchange:

IRS Governance Need to assure that the sponsor will be compliant with IRS guidelines
Ownership Own a beneficial interest in the trust
Debt Not personally assume liability for property-level debt
Liability Be limited on liability to invested equity
Expenses Incur no additional LLC costs
Voting Rights Forfeit all voting rights for decision making to Trust manager