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Selling or Purchasing Property with a Trust

When buying or selling real estate involving a trust, many questions can arise. Who signs the documents on behalf of a trust?  What is needed to prove that a particular seller has the authority to sell property?  Are there additional documents that require filing with the County Register of Deeds in order to transfer real estate to and from a trust?  The purpose of this post is to help people involved in a real estate transaction to become more comfortable with these issues.

A trust is simply a contract between the creator of the trust and a person that promises to carry out the wishes of the creator.  The creator of the trust and the trusted person, “trustee”, are often the same person.  I know, it’s weird, but that is the basic arrangement.  So, basically, in a real estate transaction involving a trust, land is deeded to the trustee to hold at the direction of the written contract or “trust agreement.”  Oftentimes, people will state that property is “in a trust” or “held by a trust.”

When deeding property to a trustee, it is important for the buyer to understand how to properly title the deed.  Most often, it will read something like “John Smith, Trustee of the John Smith Revocable Living Trust date 1-1-2018.”  If you are buying real estate to be titled in the name of a trustee, you will need to provide this information to the title company.   If you are uncertain, please contact your attorney that prepared your trust document or provide a copy to the title company.  Often, the document will indicate how real estate is to be titled.

When selling real estate owned by a trust, the trust agreement must specifically give the authority of the trustee to sell or “alienate” real estate.  The title company handling the transaction will require to see this portion of the trust document or have the trustee complete a “certificate of trust” document that states that the trust grants them the authority to sell property.

Lastly, if the original trustee has passed away or resigned as trustee, the role of the trustee passes to a “successor trustee.”  Again, in order to prove that a successor trustee has authority to act on behalf of a trust, the trust agreement or some documentation of the transfer of authority will be required.

As real estate transactions involving trusts may require additional information, it is important to timely provide documentation as required by your title company.  Additionally, here at Tallgrass Title, our closing agents and title examiners are knowledgeable in how to handle transactions involving trusts.  If you have questions, feel free to contact our office.

Inspections in a Residential Home Purchase

Imagine you are considering purchasing a new home. You may not be the most construction-oriented person or know exactly what to look for when purchasing a home.  Additionally, your financing may require that you have a home inspected prior to being qualified for funding.  Lastly, you may just feel more comfortable having experts look at your potential purchase and point out potential problems before they become, well, your problems.  After all, for most Americans the family home is the single largest investment they will make during their lives.  The purpose of this post is to describe the inspection process and the common and important issues that often arise.

Prior to purchasing real estate, most buyers (the smart ones at least) will take a look at the real estate. Either they have the knowledge to identify defects in the improvements to the real estate or they hire a person to assist them.  Another option is to inspect the real estate after a contract has been signed by the Seller and Buyer.  It is important to note that if this is the intent of the parties, the contract must specifically give the Buyer the option to inspect the property and to request repairs of unacceptable conditions if they are found.

Prior to entering into the contract or after entering into the contract (whichever the case may be) and during the “inspection period”, inspections are made. At this point, a home inspector is hired and gains access to the home in order to perform the task.  The inspector will look at a multitude of items to gather information regarding the condition of the home.  This information will be compiled in a report that is provided to the buyer.  The report will identify items of various concern and make recommendations for repair, when needed.  Major items to be inspected consist of the foundation, walls, roof, mechanical systems, plumbing, electrical and the layout of the site.

Additionally, if a loan is being procured, a termite inspection will most likely be required. This is typically performed by a different company than the home inspection.  A pest control technician will inspect the house for termite damage and active colonies and make recommendation for treatment, if needed.

Another inspection common to this region is radon testing.   Radon gas is an odorless and harmful gas that seeps into homes and can cause health problems from prolonged exposure.  For more information regarding radon issues when buying and selling your home, please refer to this link: https://www.epa.gov/sites/production/files/2015-05/documents/hmbuygud.pdf

After the inspections are made, a buyer should review the reports and determine whether there are issues of concern to the buyer. For example, if the roof requires replacement, is this in the buyer’s budget?  Is it an unacceptable condition to the seller that will require replacement before moving into the home?  Will the seller either replace the roof or pay a portion of the repair?  Will your bank still finance the transaction if the roof is not replaced?  Again, your real estate agent can assist you in navigating these concerns.

There are many licensed home inspectors, pest control technicians and radon testing and mitigating outfits in the Tallgrass Title service region. If you are unsure which inspector to hire, it is recommended to work with your realtor or banker to identify an inspector to assist you in your transaction.  In any event, buyers should always educate themselves about the home they are purchasing and protect what may be their largest investment.

Reading Your Title Insurance Commitment

A commitment for title insurance is a report your title company prepares containing information about your current or prospective real estate. If the requirements of the commitment are met, we are bound by law to issue you a “title insurance policy.” The policy is ultimately what insures your ownership in the real estate. However, the commitment is the document you will receive prior to closing. After entering into a contract, you will receive a commitment from your title company. This is your opportunity to understand whether there are any defects in the title or whether there are certain liens or easements that will prevent you from purchasing the real estate.

The first few pages of your title commitment will include a commitment jacket full of standard information and a privacy policy that is not transaction specific. I have omitted these pages from this post to focus our attention on the information about your real estate. The below diagram points out the highlights of your commitment.

Even with this diagram, understanding a title commitment can be confusing. If at any time you have questions regarding your title commitment or any phase of the transaction, please feel free to contact our office. We are here to help and answer any questions you have. That’s our job!