In the past, when you bought your home, you owned your home. However, in recent years, ownership has taken on a new, creative twist. Ownership ranges from limited liability companies (“LLCs”) to partnerships to trusts, to name a few. This holds true for purchasers who may have reasons for not wanting to place a newly acquired piece of real property in their names. Whether you are representing a Seller who is a trustee of a trust or a Buyer who wants to place the property into the name of the trust, there are several things to look for to ensure that your closing isn’t delayed because of how the property is owned in real estate transactions.
Get a Copy of the Trust
Confirm the trust’s validity that the trustee’s name is the same as your client’s. Your title insurance company is going to want a copy of the trust or, at least, a memorandum of trust, which identifies the important information of the trust, like the name of the trust, who created the trust (the “Grantor”), when it was established, who is the trustee, who is the successor trustee, and who are the beneficiaries of the trust.
Compare the Trust to the Deed
Is the name of the trust the same as the name on the deed? Typically, if the real property is owned by the trust, the name of the grantor should be an individual’s name, followed by “as trustee of the name of the trust.” It should NOT be just the name of the trust. If your client’s name differs from the name on the deed, then take the steps necessary to confirm that your client is the current trustee of the trust.
Make Sure the Trust is Already Created
When representing a Buyer in real estate transactions and the Buyer wants to place the property into the name of the trust, make sure the trust is already created. As mentioned above, get a copy of the trust. Additionally, if your client is not the grantor of the trust, you need to make sure that your client is named or appointed as the trustee of the trust.
Is the Current Trustee a Successor Trustee Because the First Trustee Has Passed Away?
Similarly, is the current trustee a successor trustee because the first trustee has passed away? If so, what has been done to confirm that this successor trustee has the authority to act as the trustee? Again, this goes directly to having a copy of the trust to review.
Was the trust created through a Will when the owner passed away? If so, is this “testamentary trust” validly created, and is the real property in a trust or still owned by the deceased owner? This frequently creates issues when determining whether a piece of real property owned by a deceased individual will be transferred into a trust through the probate process or if, under Florida’s homestead laws, the property passes to the decedent’s heirs.
Where Was the Trust Created?
If this were a trust from another state, you would need to confirm with an attorney in that state to ensure the trustee has the authority to enter into this real estate transaction.
Of course, these are just a few important questions to ask and what steps to take to ensure you get through closing without any issues. Should this type of issue arise in your real estate transactions or you have any questions about what to do if a party owns or wants to own real property in the name of a trust, always contact a qualified real estate or trust and estate attorney for a consultation.
