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SELLING YOUR HOME WHEN IT'S OWNED BY A TRUST

AUTHOR: The Professional Trustee Team

POSTED: 30 January 2015

Most people understand that when a motor vehicle is sold, the owner of the car has to sign the sale papers. These days, the buyer also has to sign the sale papers. The same analogy applies to houses owned by a trust. Vendors and purchasers have to sign an Agreement for Sale and Purchase ("agreement"). Unfortunately, this often doesn't occur and disastrous consequences can follow.

When your home is owned by a trust, it's legal ownership is vested in the trustees of the trust. Those trustees should be noted on the ownership papers of the home. It's common sense therefore, that the trustees have to sign the agreement - after all, they're the owners of the home! Common sense however, isn't always so commonly practiced.

In a recent case, a property was owned by a trust which had two trustees. We'll call these trustees Y and Z. Both trustees decided to sell the property. The property was marketed and went to auction but failed to sell. Subsequent to auction, an offer was put forward by a purchaser. Y Trustee then signed the agreement as vendor. No consultation was made with Z Trustee. In fact, Z Trustee wasn't even aware of the agreement. When Z Trustee did become aware of the existence of the agreement, they refused to sign it on the basis it wasn't in the best interests of the trust. Eventually, the whole matter ended up in court.

The court made a couple of valuable points which apply where a home owned by a trust is being sold:

1. An agreement will only come into existence when all trustees have signed it; and
2. All trustees must sign the agreement in order for the agreement to be binding, unless there is power to the contrary contained in the deed of trust.

Applying this to your own trust remember:

1. Always have all the trustees of your trust sign the listing agency form with the real estate agent when the house is placed on the market for sale;
2. Always ensure all the trustees as vendors sign the Agreement for Sale and Purchase;
3. Document the signing of the listing form and the Agreement for Sale and Purchase in trustee resolutions, having all trustees sign and date these resolutions.
4. If the trust is purchasing a property, ensure all trustees as the purchaser sign the Agreement for Sale and Purchase together with appropriate trustee resolutions.

If you fail to do the above you run the risk of the sale or the purchase not being binding, or the trustee who was omitted at the time the decision was made not consenting to the sale or the purchase. No one wants these types of headaches so an ounce of communication will be worth a pound of court cure to you.

As always, if you have any questions about selling a property owned by a trust or if we can help you, email us at info@gra.co.nz or call us on (09) 522 7955.

Request a Meeting

The Professional Trustee Team

09 522-7955

info@gra.co.nz

© Gilligan Rowe & Associates LP

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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.

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Hi Salesh, I just wanted to send you an email on behalf of GRA to say how fantastic we have found your company to date. As you know, Ben and I joined GRA a couple of months ago and have just found you so amazingly helpful in getting our new property set up correctly and sorted out. We have what I would consider a rather complicated structure as a result and it’s a fantastic feeling to know that we are getting everything done in the best way possible. We have just had approval to put a minor dwelling on the property which will make a massive difference in terms of cash flow and obviously value, something we would never have even thought of without GRA and which we are very excited about. During the buying process we attended a seminar with Matthew and from the outset thought he was fab. We therein signed up for property school and found this nothing short of fantastic. The content was relevant, up to date and comprehensive, but more importantly it was taught in a way that we could actually understand and really get value out of. I wanted to mention also, that everybody GRA have recommended to us has been just so efficient and absolute masters at what they do. A wonderful network of people that we feel very lucky to now be able to call on. From Kris Pederson and Bryan Rist who put our mortgage together to the insurance guys they then referred us to, I’m super impressed. Within GRA, Ellery has probably turned things around for us faster than I’ve ever known before, something which we appreciated so very much when it came to crunch time. She’s always a pleasure to deal with and again, we’re stoked. We’ve just settled on the property today and are about to go and get the keys. I’m pretty pumped and hence this email is probably rather excitable. So, a massive thank you to you Salesh, the partners for such a fabulous 6 weeks at property school and everyone at GRA for their help. May this be the start of our property empire. Thanks again, - A & B - July 2015

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