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tanyikaj

Trustee/Land trust issue

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Is there a trust expert out there that can help me with this. I own title to a house that I have put in a land trust. My LLC is the trustee of the land trust. I flipped the house to an investor by doing what I thought was changing the trustee from my LLC to him. By some mix up the transfer never took place. Now the house still shows my LLC as the trustee. Now the investor - who basically owns the house in my mind as I've had nothing to do with it for the past three years - is selling the house. Since SDAT documentation still shows my LLC as the trustee the title company is requesting that I come to settlement to sign for the seller (the seller being the land trust but my LLC is the trustee). I don't want to sign as seller because the investor is the one selling and he's been the owner for the last three years in my mind. The bank he's using won't allow us to change the trustee to his name (the investors) at this late date.

 

The problem with signing the settlement docs is that the investor is taking back a second from the buyer. I don't want to be tied into that. I've spoken with a lawyer who says I don't need to go to settlement and that I can change the trustee after the closing. However, the title company is saying I do need to be at settlement. How can I wash my hands of this property and this trustee/land trust confusion that has come with it?! Argh!

 

Thanks for any help you can provide.

 

- Nikki

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Since he is benificiary of the trust, you can resign as trustee and a new one can be appointed. Also, the resignation can be recorded along with new appointment of trustee. That should do two things. Clear the title company and the investor can show full title seasoning.

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It seems to me that the problem is not really who is the trustee, but who is the beneficiary of the trust. Did you ever give the investor a substitution of beneficiary when you "sold" him your LLC?

 

If not, then the LLC can only act as a fiduciary for the beneficiary of the trust. I am guessing that the title company sees you are the beneficiary of the trust and just wants to be sure that all parties with an interest in the deal participate in the settlement. Since you may still be the beneficiary of the trust, you are the beneficial owner of the proceeds of the sale.

 

One simple solution is to dissolve the trust and vest property title with the investor. You as beneficiary of the trust would probably need to cooperate in that. Then, the investor can complete the settlement with his buyer.

 

Just the way I see it. But what do I know?

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He never sold the LLC. I am sure they did an assignment of benificial interest. What would need to happen is that when the trustee signed, then a new trustee should have been appointed. Depending on the trust documents, I am sure that the trustee is at the direction of the benificiary.

 

I am not a fan of legal entities being Trustee, in some states its a no no.

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As I read the original post, a substitution of trustee was accomplished but never recorded. As far as the title company is concerned, the LLC is still the trustee and Nikki is the manager of the LLC. Nothing was said about whether beneficial interest in the trust was conveyed so I am assuming that this did not happen.

 

Given that the LLC is still the legal title holder of the trust, then the manager of the LLC needs to convey title to the investor so the investor can complete the settlement with his buyer. One way to do this is to dissolve the trust, which Nikki as the manager of the LLC and as the grantor (and probably still the beneficiary) of the trust can do.

 

Nikki stays completely out of the transaction between the investor and his buyer.

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