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.