In a trust arrangement, a settlor transfers property to another person (the trustee) for the benefit of a third (the beneficiary).
Because the trust is not a person, title to any real property transferred to the trust should be vested in the name of a trustee on the trust’s behalf. In most living trusts, the settlor serves as trustee.
To transfer real property out of trust, the trustee executes a deed. In Alabama, this task is accomplished using a statutory warranty deed, codified at Ala. Code § 35-4-271. Instead of a general warranty deed, which protects the grantee against any claims against the title, Alabama’s statutory warranty deed contains a limited or “special” warranty, which reduces the grantor’s liability, making it more appropriate for most trust transactions.
Whereas the grantor of a general warranty deed warrants the quality of title against the claims of all persons, the grantor of a statutory warranty deed warrants only against claims which stem from the duration that he held the title, with no warranty against title defects which may arise from conditions that existed before they held title.
A statutory warranty deed, identifiable by its use of the words “grant,” “bargain,” or “sell” in the granting clause, has the same requirements as any document pertaining to an interest in real property in the State of Alabama. The form requires the grantor’s information, including the name of trustee and name and date of the trust; the grantee’s information, including name, marital status, vesting information, and address; the full legal description of the property subject to the transfer; a recitation of the source of the grantor’s title; and information identifying the document preparer.
Recipients of a deed executed by a trustee may request a certification of trust under § 19-3B-1013 to verify the trust’s existence and the trustee’s authority to convey real property.
All acting trustees must sign the deed in the presence of a notary public and one additional witness before recording it in the office of the probate judge for the county wherein the real property is situated.
Consult a lawyer with questions regarding living trusts and conveyances by trust in Alabama.