Trust Mistake - Posted by Tiffany

Real Estate Investing
#1

Posted by Jim Kennedy - Houston, TX on July 18, 2001 at 23:25:59:

Bud,

I agree. In fact, I just did a deal with one of those exceptionally long metes and bounds legal descriptions. And I’m aware that you can have multiple properties in one trust. I use three schedules attached to the trust, A-C, listing separately: names and addresses of the beneficiaries, compensation of the trustee, and legal description and physical address of the trust property. What I don’t understand is the reason for separating the legal description from the physical address into two separate schedules.

And, like you, I’d be interested in learning the modifications that Alex’s attorney made to the trust documents.

Best of Success!!

Jim Kennedy,
Houston, TX

#2

Trust Mistake - Posted by Tiffany

Posted by Tiffany on July 18, 2001 at 11:27:12:

Apparently, the advice I got when I set up the trust that owns my property was incorrect. I am trying to sell the house now and the title company wants a copy of the Trust Agreement. I have only a couple of pages. The title company said that the paperwork on a trust should about 1/4 of an inch thick. Can someone direct me to the correct paperwork?

#3

Re: Trust Mistake - Posted by TC

Posted by TC on July 19, 2001 at 21:13:39:

This may not help you now but it is good to choose a title company that understands creative real estate and more so understands trust’s.Usually the trustee is bound by the trust to keep private beneficiaries names.A certification of trustee will sometimes do the trick.You can find this in Bronchicks Land Trust course.

#4

Re: Trust Mistake - Posted by Randy McKee

Posted by Randy McKee on July 19, 2001 at 09:44:46:

Tiffany, we can probably steer you in the right direction if we know a few things:

Are you the Trustee?

If you are, you can probably just deed the property back to yourself personally and sell it that way. This would probably be the simplest. Check with the title company to see if they would go for that.

Are you the sole beneficiary?

If you are, then that streamlines the process. I agree that a good Memorandum of Trust gives the title company what it wants: 1. That a trust was, in fact, established. 2. Who the Trustee is. 3. Who the Successor Trustee is. You can provide the beneficiary page of the trust. The trouble is that the title company has a fiduciary responsibility to the beneficiaries of the trust - just like the Trustee has.

Think about deeding the property back to yourself if you can and that should solve your problem right away. Let me know if there are other circumstances surrounding this transaction and maybe I can help you more - especially with the trust questions.

Best of SUCCESS!

Randy McKee, CEP

#5

Re: Trust Mistake - Posted by Scott (AZ)

Posted by Scott (AZ) on July 18, 2001 at 13:36:17:

Why does the title company need a copy of the Trust Agreement? Do you necessarily want to do this? You will be disclosing who the beneficiaries are. Can you give them a memorandum of trust, or something else instead?

How does everyone else deal with this?

Scott

#6

Re: Trust Mistake - Posted by Ben (FL)

Posted by Ben (FL) on July 18, 2001 at 12:46:17:

I’m assuming you’re talking about a Land Trust, rather some other type of trust.

How can they possibly know how thick your trust is?
Ok, so maybe when they’ve dealt with other trusts before, the trust agreements were very thick. I’ll bet, though, that these were not Land Trusts as described by those on this site.

I’m not a lawyer, but from what I understand, as long as the agreement says who the beneficiary and trustee are, the property in trust is properly described, and the duties of the trustee and beneficiary are described, you havea trust. This could be 2 pages long.

Sounds like you need to either 1) Educate the title company or 2) find a title comapmny that knows wha ta land trus tis.

#7

Re: Trust Mistake - Posted by Tiffany

Posted by Tiffany on July 20, 2001 at 07:33:30:

I think I will chose another title company. Thanks for all your help, everyone.

#8

Re: Uh… - Posted by Joe M

Posted by Joe M on July 18, 2001 at 14:15:41:

Scott, the beneficiaries only need to be a secret when the due-on-sale clause is an issue, while holding a property. She’s selling the house. Doesn’t matter if the beneficiaries are known…the loan is getting paid off…no DOS concern anymore. Besides, the trust agreement doesn’t necessarily show who the current beneficiary is, anyway. The beneficial interest could have been assigned to someone else.

#9

Re: Trust Mistake - Posted by Tiffany

Posted by Tiffany on July 18, 2001 at 12:57:35:

If what you’re saying is true, then I do indeed have a legal trust. I will have to educate the title co. Thanks for your response.

#10

Scott, you’re in Arizona? Trust question… - Posted by Dawn

Posted by Dawn on July 18, 2001 at 17:34:25:

Hi Scott,

I thought land trusts were illegal in Arizona. How do you have your trust set up? Another state? Feel free to e-mail me privately.

Also, can anyone recommend a good book (or site) for setting up a trust?

Thanks for your help.
Dawn
Jettio@aol.com

#11

OK, but… - Posted by Scott (AZ)

Posted by Scott (AZ) on July 18, 2001 at 16:37:51:

Sorry about that… I missed that she is selling the property. But…

You said “the beneficiaries only need to be a secret when the due-on-sale clause is an issue, while holding a property.”… what about anonymity? Even if there is no underlying note, you can still use a Land Trust to hide, from the public records, who the owner is (and you wouldn’t want to disclose who the beneficiaries are) while holding the property. So, your statement isn’t entirely correct.

I was wanting to know how other people handle title/escrow companies, or anyone else, that requests a copy of the Land Contract (when the REI is buying).

Thank you,

Scott

#12

Just ask - Posted by Alex Gurevich, TX

Posted by Alex Gurevich, TX on July 18, 2001 at 13:12:32:

Instead of trying to educate them, just ask what in their view is missing in the document you gave them: notary stamp, identification of parties, indentification of the property, etc.

Then you’ll know what the problem is.

#13

Re: Scott, you’re in Arizona? Trust question… - Posted by Scott (AZ)

Posted by Scott (AZ) on July 18, 2001 at 18:09:06:

Hi Dawn. Land trusts are not illegal in Arizona, but you do have to disclose who the beneficiaries are. You can, though, make the beneficiary a personal property trust. Bill Bronchick has a very good land trust course which covers this and more… http://www.legalwiz.com/ltbook.htm

Best of luck to you,

Scott

#14

Re: Just ask - Posted by Tiffany

Posted by Tiffany on July 18, 2001 at 13:17:43:

I asked them what it was they needed. I have everything on the few pages that they said they wanted: signatures, trustee, beneficiary, duties of Trustee, property info. It’s just not the form they are used to seeing. What form(s)is the most commonly used by the people that visit this site?

#15

Knowing the beneficiaries… - Posted by David Alexander

Posted by David Alexander on July 18, 2001 at 14:23:58:

is not their obligation… That’s private.

If your deed gave power of direction to the trustee… then the only thing they need to know is who the trustee is and then the trustee directs how payment(s) will be handled.

I usually have the payments wired to the benificiaries accounts… or directly to mine and I disberse funds later, so I dont have to deal with cashing a check made out to a trust, or person as trustee.

David Alexander

#16

Re: Just ask - Posted by Alex Gurevich, TX

Posted by Alex Gurevich, TX on July 18, 2001 at 13:26:22:

If you have all the elements they need, but still have objections, I’d ask them to FAX your trust agreement to their title underwriter’s attorney to OK it, or come up with the specific objection.

Most likely they will OK; if not, at least you’ll know what’s wrong.

I’d also send it to another title company to get a second opinion. You can always move the closing to somebody more willing, if you have to.

As far as forms used. I use one out of the LeGrand’s course. However, I had it reivewed and modified by a local attorney to comply with Texas statutes for trusts.

#17

Re: Knowing the beneficiaries… - Posted by Alex Gurevich, TX

Posted by Alex Gurevich, TX on July 18, 2001 at 16:46:45:

Actually, if it’s of somebody’s business at all - it’s the of title company’s. They are disbursing the proceeds of loans at closing. Unless I am closing with my usual title agent who knows how I operate, I am frequently requested (50% of the time) to furnish a statement from the beneficiaries on how to direct the disbursement of the proceeds. On a few occasions, when attorneys were looking over the closing, I was also requested a statement from the beneficiaries authorizing the sale.

Everybody wants less liability nowadays, including title companies.

I don’t see why argue with them at this point. The deal is over anyway, we just need to pick up a check at closing. I’d just give them what they want and get the money.

#18

Re: Just ask - Posted by Tiffany

Posted by Tiffany on July 18, 2001 at 14:27:28:

Just out of curiosity, how long is your form?

#19

Re: Knowing the beneficiaries… - Posted by David Alexander

Posted by David Alexander on July 18, 2001 at 20:08:57:

I never get into the argument about it at all… but the trust agreement says the Trustee directs…

I’ve never had one argue with me over it.

David Alexander

#20

Re: Just ask - Posted by Alex Gurevich, TX

Posted by Alex Gurevich, TX on July 18, 2001 at 14:33:25:

12 pages, 4 of which are Exhibits A-D listing seprately: legal description, physical address, names and addresses of the beneficiaries, compensation of the trustee.