How do you sell real estate in your trust?
I was recently meeting with some folks and they had some questions because we were getting ready to fund their trust and in funding their trust, they we were transferring their home and some other properties into the trust. We were having new deeds made up so the property could be transferred into the trust. And so they, they had some questions about their main home. Specifically, they thought they weren’t going to stay in the home for the rest of their lives, and they believed the house would be sold within 10 years.
They also had some other properties that they may want to go ahead and sell or liquidate the real estate depending upon where we are in life. They were wondering if there would be a problem with selling properties in the trust? And I explained to them there’s no problem, but there might have to be some things that need to be done. So this was a revocable living trust or what we call an RLT. In the trust, the grantor usually retains the role of trustee during his or her lifetime. So the grantor/trustee has the legal authority to sell any property within the trust. What will need to be done usually depends upon the bank and the title company’s underwriting department. Either way is not a problem, but each bank and title company may want it done a different way.
Some banks and mortgage companies may require you to go ahead, and retitle the property back in the grantors name for the sale. So you’d prepare a deed and title the property back to the grantor individually. This procedure is just gonna require a recording fee to, to record the deed at the County’s recorder office.
The second way is that you will not have to do any additional steps. As the trustees, you will be able to sign the closing documents, you’ll be able to sign the deed and transfer the property as trustees to the new buyer of the property.
In summary, there is no problem selling a property within the trust as long as the trustee has the power in the trust document. In a typically revocable living trust, the trustee will have the power to sell. So, it’s going to come in one of two flavors. It’s nothing to worry about. Sometimes you have to jump through that additional hoop of going ahead and transferring the property out of the trust at the time of closing and then having multiple deeds prepared and getting the initial deed recorded and then the subsequent to the new purchaser recorded.