What Realtors Need to Know When Selling Property Held in a Revocable Trust

It’s a Matter of Trust

If you’re buying or selling real estate, one of the first things you need to know is: who owns the property?  While there are many different ways to hold title to real property in Florida, this blog is focused on real property that is titled in the name of a trustee for a revocable living trust.

As Florida’s population ages and estate planning becomes more prevalent, encountering real property held in revocable living trusts is becoming more common.  Don’t panic – these aren’t as mysterious as they sound. Understanding the basics of trusts can help ensure smooth closings while protecting your clients.

What is a Revocable Living Trust?

A revocable living trust is an estate planning tool where an individual can transfer property out of their own name into a trust. There are three basic roles involved in creating a trust. 

1. There is the person who establishes the trust, called the grantor or settlor.  That is simply the person who hires the attorney to draft the trust itself. 
2. There is the person who manages the trust, called the trustee, who is typically the grantor during the lifetime of the grantor.
3. There is the beneficiary or beneficiaries, the person or persons who get the benefit of the assets in the trust. 

One of the benefits of setting up a revocable living trust is that the assets held by the trust will usually not have to go through probate when the grantor passes away.  The successor trustee is able to manage and distribute the trust assets to the named beneficiaries after the passing of the grantor. These trusts are governed by Florida Trust Code (Chapter 736, Florida Statutes) – riveting bedtime reading, we promise.

Essential Documentation Before Signing a Listing Agreement

The Trust Agreement

Always request the complete trust agreement, not just a “trust summary” or “certificate of trust.”  The actual trust agreement can be longer than War and Peace and twice as confusing, but it’s essential. This trust agreement establishes:

• The trust’s validity and terms;
• The trustee’s authority to sell property;
• Any restrictions on real estate transactions; and
• Successor trustee provisions

Trustee Authority

Verify who has the legal authority to sign contracts and closing documents

• Living grantor as trustee
  • Generally has full authority to sell.  For Grantor-Trustee Sales, when the original trust creator is alive and handling the sale, the process typically mirrors standard transactions with additional documentation requirements. It’s like a regular sale, but with more paperwork and fewer headaches than explaining HOA special assessments.
• Successor trustee
  • When someone else is acting as trustee, additional verification is needed to confirm their authority and the circumstances that activated their role. Think of it as checking someone’s hall pass – except the consequences of getting it wrong involve title insurance claims instead of detention.  You must obtain documentation reflecting what triggered their authority (death, incapacity, or resignation of original trustee), which may require you to get a death certificate, guardianship paperwork, or a signed resignation by the original trustee.

Property Title

Confirm the property is properly titled in the trust’s name, typically shown as “[Name], Trustee of the [Trust Name] Revocable Living Trust dated [Date].”  The deed should have the same name as the trust documents.

Be cautious and recommend legal consultation when you encounter

1. Reluctance to provide the full trust document. This is a red flag that should automatically have you refer the seller to a qualified real estate attorney.
2. Conflicting information about who can sign documents
3. Recent changes to trustee appointments.
4. Family disagreements about the sale, which happens once the grantor passes away and the family is now involved in the trust, either as beneficiaries, trustees, or both. 
5. The trust language is unclear or outdated, or the trust is unclear about the sale authority.
6. Property title issues are discovered.
7. Multiple trustees must act together.
8. Questions arise about trustee capacity or authority.

Bottom Line, trust-held property transactions require extra attention to documentation and authority verification, but they don’t have to be intimidating. The key is obtaining proper documentation early, understanding the basics of trust ownership, and knowing when to recommend professional legal guidance. Think of trusts as that friend who’s a little high-maintenance but ultimately worth the effort. 

While these sales have additional requirements, they follow the same fundamental principles as traditional real estate transactions.  As always, if you have any questions about trust ownership of real property, before you enter into that listing agreement or the sale and purchase agreement, please consult with a qualified local real estate attorney.