This is just another way we are going above & beyond to help our buyers sellers throughout the home buying process.

Will the Real Seller, Please Stand Up?

We recently had an issue involving the identity of the seller of a property. The listing agent had the Personal Representative of the Estate of the deceased owner of the property sign the listing agreement and put the house on the market. The tax records reflected the deceased owner's name so all of this made sense. The Personal Representative of the Estate signed an offer from a buyer and the contract was ratified, right? All of you know it would be too easy to say yes.

After researching the title we discovered the property was not held by the owner individually which upon his death would have passed to his Estate. The Personal Representative named by the Court would have the legal authority to sell the property as was thought above. Title to the property was in fact held in a Trust. In order to determine who had the legal authority to sell the property we had to review the Trust Agreement. After reviewing the Trust Agreement, we were able to determine that the Trustees were no longer living and their successor trustee was also no longer living. There was no one who had the legal authority to sell the property. How do you solve this problem?

We went to court and filed a consent order to have the Personal Representative of the Estate approved to serve in the legal capacity as Trustee of the Trust to sell the property. The consent order was granted by the judge and we went to settlement, right? Wrong! The Beneficiary of the Trust was a Non-profit Organization, so it made more financial sense from a tax perspective to have the Beneficiary of the Trust sell the property to the Buyer than it did the Trust. In order to accomplish this goal we had the parties acknowledge the seller of the property was in fact the Trust not the Estate and that the Court Appointed Trustee would assign the contract to the Beneficiary of the Trust and the Non-Profit Beneficiary accepted the assignment of the contract. We then had the person authorized to sell the property on behalf of the Non-Profit Organization convey the property to the Buyer.

What is the lesson learned? Sometimes the best made plans still have a wrench thrown into them. It is very important to remember when dealing with an entity (Limited Liability Companies, Partnerships, Estates, Trusts, etc.) that you have all of the documents provided and reviewed as soon as possible. The attorneys at KVS are here to review them for you at no additional cost to your client.