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The purpose of this statute was to eliminate title problems in cases where people added "as trustee" to their names on deeds. Use of a deed with merely the words "as trustee" can have unfortunate consequences. " Other problems come up when an instrument is recorded that does not comply with either statute. Example: If a deed was recorded that named both a trustee and beneficiaries, then it would not fit the requirements of either statute. If the only problem is clearing the title, the simple solution would be to obtain the signatures of all interested parties.
AGENCY LAW Agency law concerns the issue of who can legally do something which will bind another person. Court cases involving land trusts have held that the trustee is not the agent of the beneficiary. Therefore, a trustee’s acts do not create liability for the beneficiary. (Lawyer’s Title Guaranty Fund v. ) However the trustee’s acts would be binding upon the property in the trust. Likewise, the beneficiary is not the agent of the trustee and cannot create liability against the trustee. (Gallagher & Speck v.
The author usually writes "Grantor Trust" nearby to clarify. NOTICE TO THE IRS As explained in Chapter 9, notice should be sent to the Internal Revenue Service when a trust is formed and a fiduciary relationship begins. The IRS has recently released a proposed IRS FORM 56-A to be used with land trusts, but at the time of publication of this book it had not received final approval. 45 08 LT ch4 5/24/02 8:40 AM Page 46 FINANCING PROPERTY IN A LAND TRUST 5 The financing of a land trust can be structured in two ways, with a mortgage of the real estate signed by the trustee, or a pledge of the beneficial interest signed by the beneficiaries.