Wednesday, March 24, 2010

Trying to sell a house in Living Trust? MAKE SURE your house is actually included in the Living Trust. No really.

If you follow me on Twitter, you will already know that I have had the great displeasure of working through a pretty random "Title" issue on one of my listing transactions...and then the same issue to occured on another one of my buyer transactions! All within the course of a week's time!

So a little background. In both instances where I am experiencing this issue, the homeowner had passed away, leaving their heirs (or if you want to get technical, the "Successor Trustees") the responsibility to deal with the estate, including selling the home. Under normal circumstances, the Successor Trustee has full authority to list the property for sale, and sign a new Grant Deed to transfer title to a new buyer.

So regarding the first instance of this title issue...I am representing a seller - aka, the Successor Trustee of his father's Living Trust. This man's father passed away in January, and the seller is in Sacramento (he lives in Puerto Rico) dealing with his father's estate. He wanted to list the house immediately. He informed me that he had full authority per the Living Trust to sell the home. When I looked in the tax records, it appeared that the name on the title of the property was an individual, rather than the name of the Living Trust itself. OK. So I asked Placer Title Company to provide me with a property profile....sure enough, the title to the property was held in the name of the deceased father. The seller was frustrated...the house was specifically named in the Living Trust as being owned by the Living Trust, so what was the issue? Well, in order for the Living Trust to actually own the house, and for the Successor Trustee to have full authority to sell the house, a new Deed naming the Trust MUST HAVE been recorded at the county recorder's office. And that had not been done.

So regarding the second instances of this title issue...I am representing a buyer of a property whose owner had passed away. I received a copy of the preliminary title report from the title company, and it again named an individual as the property owner, rather than a Trust entity as the owner. Inspections were completed, the transaction was rolling forward nicely, and the buyer's loan documents on the way...BUT the Successor Trustee can't sell the house, because again he does not have full authority to do so, because a new Deed naming the Trust as the property owner was never recorded. UGH.

So what do we do to remedy this situation? Well, the Successor Trustee must schedule a Sacramento County court hearing, and file what is known as a Heggstad Petition so that the home does not have to go through the probate process. This process, from what I have been told, can take about two months from start to finish.

My seller client in scenario one has this Heggstad Petition process underway, and we are not listing it until he has been granted full authority. Definitely an inconvenience, as the seller wants to get back to his life in Puerto Rico...but our proactivity will be rewarded with the ease of being able to list and sell the home in a few weeks.

My buyer client in scenario two, however, is getting the short end of the stick. We are just a week from our scheduled closing, and the Heggstad Petition process is just now getting underway. He will loose his interest rate lock. He must postpone his move. UGH.

The moral of the story - if you have a Living Trust, or are planning to create one, PLEASE be sure to record a new Deed so that not only is the house named in the Living Trust, but so that the Living Trust actually owns the house! If you have an elderly parent, it probably makes sense to check to see if this has been done for their trust. You will potentially save yourself lots of time and money later.

1 comment:

omaha houses for sale said...

There are so many ways of selling home. You must give the trust to the buyer of your home. The buyer must feel that the home they want to buy is good and fulfil their most of requirements.