Becoming A Trustee
When someone asks if you would like to become a trustee for them on a Land Trust, is there anything you should know or be careful of?
I don't mind doing it, obviously want to learn more about it, but want to make sure I would not be getting into anything I don't understand and could bite me back later.
The Solutions Kid
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Anyone? Bueller? Bueller?
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Being a Trustee is very serious business. A trustee has a fiduciary responsibility to guard the corpus of the trust.
Should he/she fail there are legal repercussions. Before you become trustee of a land trust ,you should know what your responsibilities are, how to protect yourself from liability, and how a trustee is suppose to perform his/her duties.. That's the minimum.
Until you learn, it would be prudent to decline.
Well, that's great but how in the world do I find out the legal responsibilities are, etc.
Find your state's trust statute at the county library, read a bunch of case law regarding your state's interpretations of the fiduciary duty, or just go see an attorney who specializes in trusts to give you the benefit of their experience. As a general rule of thumb, if you are the trustee and something goes wrong, you can count on being the subject of a law suit. If you do become the trustee, make sure there is an insurance policy maintained to cover you.
Gads man - spend a nickel and consult a trust atty!
SK:
Are you in possession of a Declaration of Trust Doc???
If so it should spell out everything for you especially regarding protection of the Trustee from untoward actions of others...form of a HOLD HARMLESS Clause...
If your doT doesn't I mave have some samples that could fit your needs
Hope this helps
Hey Graves, My understanding of the trust is that the Trustee is only the "beard" of the beneficiary as it were, acting as fiduciary on the direction and at the behest of the beneficiary, and is not actually subject to liability.
Beard of the Bene! I like that. Now why is it when I am the Bene on a Note sec. by TD in foreclosure, do I get so mad at the Trustee. Like he fails to Post the property, Downdate the Sale Policy prior to auction. Notify all parties entitled to notice of sale. Fail to qualify bidders properly and then fail to shut them down when they bid over their qualification. I dont know.
Title Insurance and Trust Co. as Trustee used to run a very good sale in the lobby of their office on Spring St. If persons unknown started to massage the sale by stopping bidders or doing voice overs to hide bids, or step on bids to prevent bidding. They would stop the sale, announce that it would be held up until certain actions ceased. They had command of the sale. But alas they are no more.
Accordingly I must now substitute myself in as Trustee whenever any interest of mine or any investor of mine is a named Bene on a TD then in foreclosure.
I am really forced into doing this as most of the Trustees now active in the Great ? State of Calif. seem to goof up something fierce. I would say that almost half of the sales I see, are ripe for a suit in damages. I look the other way because a foreclosure to me is a failure of someone to solve a problem.
Or in a few instances it is a manipulation to remove liens, judgements, secondary Trust Deeds/Mortgages, etc. etc.
the requirement to be a Trustee, have no visable attachable assets. Hang out with all sort of Lending Entities. Have a nice voice and a pleasing manner and examine all checks, money orders and cash with great care.
Beard of the Bene, I like it, has a great ring to it. But not so.
Cheers Lucius da Trustee bar tet
Lufos:
we are talking about a "Land Trust" Trustee, not forclosure......................
Accoding to a knowledgeable RE Atty w/expertise in Land Trusts,
"generally, a trustee is not liable to third parties for acts perpetrated within the scope of his duties as trustee, so long as he discloses his representative capacity. Furthermore, most states have laws that protect a trustee from personal liability for activities carried out in furtherance of the trust. A trust agreement will usually state that any debts or obligations incurred by the trustee for the trust will be obligations of the trust only. Since the trustee and the benes are not partners or agents of each other, they do not have the authority or power to bind one another for obligations. Any obligation which the trustee incurs for the trust remains the obligation of the trust itself, not the beneficiary. A trustee should always make it unmistakable to third parties that he is acting in a representative capacity. A trustee is not personally liable to third parties unless he personally commits a wrongdoing or fails to disclose his fiduciary capacity.
Nuff Said, Hope this helps!!
Ben
I am quoting now dec. Judge Conde, wrote the book on probate and most of the literature on trusts.
He always said that if you were involved in Land Trusts, why look at the beginning of them all the Mortgage System utilized in California. The Trustor, he who borrows. The Trustee he who holds title to the land during the period of the encumbrance and the Beneficiary he who has lent the money.
If you are concerned with duties then look at the above. He always said loud and clear that this was first instrument and upon it all others (Land Trusts ) were based.
I still have his two volume on Probates and one somewhere on Land Trusts, he limited himself to California only.
Cheers Lucius
Tell your friend you MIGHT do it, but you'd first want to see the trust doc spelling out that you have NO liability to benes, for anything, etc., in great detail, and then you'll consider it.
This waiver of liability is actually part & parcel of most all bank trust agreements, and banks' trust depts. are about as cautious as you'll find.
And it's your friend here who'll be spending his money on the lawyer, so it's a free ride for you, and a chance to learn first hand about the values of a trust at NO expense to you.
After his lawyer does his thing, and you can read his trust agreement and its "hold harmless", then you would probably be advised to go with your friend to his lawyer's office, and ask some hard questions at your friend's expense...the lawyer will tell you about any aread of liability he/she sees.
Ground control to Major Tom........
coo coo. coo, coo
Lufos, wat are you smokin??