Accepting the Deed to a Home From a Trustee

So you’re buying a home from a seller whose property is held in a trust. Should you be concerned?

In most cases, no worries. This is a common occurrence. Many families pass their real estate between generations through a trust. In turn, the trust can enable its trustee to pursue a sale of the home. So, your real estate agent has likely seen it before — perhaps many times.

Read on for a Q&A-style orientation to buying a home from a trustee.

What Is a Trust?

If a home for sale is in a trust, a person called a trustee holds its current title on behalf of someone else, who is called a beneficiary. A trust is created to pass assets to the beneficiary.

Under the terms laid out in the trust instrument, the beneficiary (or beneficiaries) have a present or future right to receive proceeds of the real estate sale from the trustee.

Who Is a Trustee?

A trustee is someone who holds the current title to the property that the creator of the trust placed in it. The trustee has the role of handling the sale of trust property on behalf of the beneficiary (or beneficiaries) in the manner that the trust creator specified in the language of the trust.

There can be more than one trustee for a trust. If a trustee dies or becomes unable to continue serving in the role, the trust company might step in to take over the role (assuming the beneficiaries don’t object).

With a Trustee Selling, Will the Purchase and Sale Agreement Between Seller and Buyer Differ From the Norm?

The legal agreement will be between you and the trustee. Signatures and management of the trust property will all come from the trustee.

The seller’s signature will be identified by the person’s name, and “Trustee.” Often, one of the heirs to the property through an estate is the trustee. You’ll be able to see that there’s a trust, but otherwise the sale should go on just like any normal home sale.

Will I Get a Better Deal on a Home Coming From a Trust?

No. This is because the trustee must always act in the best interest of the trust’s beneficiaries. And this means seeking fair market value from a buyer.

The trustee’s powers may not be used to undermine what the beneficiaries will receive. This is the case even if the trustee is a beneficiary.

Buying with a co-owner? Be ready to say how you want to be named and vest your homeownership shares on your deed — whether as joint tenants with survivorship, tenants in common, tenants by the entireties, or something else.  

Will the Sale Itself Be Any Different?

The trustee will produce trust-related documents to the buyer. Otherwise, as we’ve noted, the buyer will have a normal experience.

The trustee’s real estate agent will list and show the home, and negotiate with the buyer’s agent.

A title company will verify the insurability of the home. Then the deal can close, and the sale proceeds can go into the trust account on behalf of the beneficiaries, as directed by the language of the trust.

Will There Be a Mortgage Balance Left on This Home?

The beneficiaries will be responsible for paying off any loans against the home (out of their proceeds, for example). But in all likelihood, the trust instrument will have already directed the trustee to resolve any outstanding secured debts.

A title search and warranty deed serve to verify that there are no surprise claims still attached to the home.

Will I Get a Warranty Deed From the Trustee?

In your purchase agreement, you can stipulate that the trustee will produce a warranty deed. If you’re working with a mortgage company, the lender will expect a title search and warranty deed. Avoid taking any other type of transfer (which will increase your risk, impacting the value of the sale) without the lender’s and title insurer’s written approval.

It’s the role of the trustee to make sure the home has a marketable title, with all legal provisions fulfilled to enable a transfer of ownership to you.

If you buy a house, ask to purchase an owner’s title insurance policy. It will protect your right to hold your deed against unknown claims.

Could Other Trust Beneficiaries Interrupt This Deal?

Only the named trustee(s) need(s) to sign the deed over. A deed signed by all beneficiaries isn’t required. Trustees are normally authorized to sell real estate from the trust without the other beneficiaries’ say-so, as long as selling serves their collective interests.

The original creator of the trust (also known as the settlor or grantor) may have put certain directions into the instrument about how the sale should happen. Some trust instruments have language saying all beneficiaries must agree to the sale. This could allow a beneficiary to stand in the way of a sale. But this situation is uncommon.

How Do I Officially Take Ownership?

The trustee will sign the deed over to you. Your deed is proof of the transfer of title.

On closing day, you’ll receive the deed to your new home.

A signed and notarized deed should be recorded with the register of deeds (the home’s county recording office). You’ll pay a modest fee for filing your deed with the county. Fees should appear on the county’s website.

The county will record your deed and send the original to you at your new home.

Rules about deed formatting, the language deeds must contain, and how deeds must be notarized and/or witnessed vary by location. The deed forms available on this site are continually updated and always compliant with state and local provisions.

How Long Does It Take to Get My Deed?

A preliminary copy of the deed will be in your closing papers. This copy can be used to show schools and other entities that you own the home.

Meanwhile, your title agent at closing will file your official deed with the county recorder’s office. This will make the deed a public document. Then the title company will mail your original deed to you. Depending on your state, this means your deed will arrive in the mail within days or weeks after closing.

Important note: Although a trust is a legal instrument, reading this site is not the same as seeking legal advice from a lawyer through an attorney-client relationship. Laws vary by state, so consult a lawyer in your location with concerns involving a trustee.