What Happens When a Trustee is Directed to Sell a Trust's Property Assets? | Asset Protection for Real Estate Investors : Royal Legal Solutions

What Happens When a Trustee is Directed to Sell a Trust’s Property Assets?

If you’re not sure how to sell property from a land trust, you’re not alone. Even experienced investors are often unaware of this tool’s mechanics, even if they are hip to its many benefits. Today, we’re going to talk about the sales process. What happens when you want to sell property in a land trust? Are there legal implications you should be aware of? Read on to learn what you should know about these types of sales.


Selling Land Trust Assets

Selling an asset from a land trust is more of a process than an ordinary transaction. For starters, the trustee can’t make the decision alone. Normally, the beneficiary must direct the trustee to sell the underlying asset.
 
Some states ensure trustees are compensated for their services. Typically, when a sale is executed, there are laws in place that state the trustee must be paid anything he or she is owed at that time. Exact figures on how much will depend heavily on your location and the terms of your trust agreement.


What Happens to Property Sold From a Land Trust?


The actual sale of the real estate kicks in some legal matters most people aren’t familiar with. When you sell a land trust asset, as soon as the sale goes through, the funds remain in the trust. However, the money itself is automatically converted into a Personal Property Trust.

Personal property has a different legal function than real estate. The purpose of the Personal Property Trust is to hold any money from the real estate transaction for the beneficiary. The trust system and all of its parties remain in place, and any cash earned from the sale is still secured within the trust.

Occasionally, the trustee is able to recover funds from real estate sales under certain circumstances. This will only generally apply if the trustee is owed compensation for services rendered prior to the sale. Your trust agreement will spell out how this could happen, but ordinarily the trustee would be able to recover however much is owed to them directly from the sale. Some states also permit trustees to get “first dibs” on any foreclosed properties.  Note that these situations are completely avoidable if you ensure your trustee is being compensated properly.


Bottom Line: Manage Your Trust Agreement Well


The critical part of ensuring smooth sales from your land trust is a well-crafted trust agreement. You might be an awesome real estate investor, but contracts are the domain of attorneys. We never recommend that any investor go DIY on contracts. Leave this matter to the professionals, and do what you’re good at: running your real estate empire.

Royal Legal Solutions is one of few firms in the nation that routinely assists with land trusts. We are attorneys, but we are also investors just like you. Whether you need to establish your land trust, seek advice on managing it, or make a sale from within it, we can help. Before you make any sales, schedule your confidential land trust consultation to ensure you’re doing it by the book.
 

Discuss The Legal Safety Of Your Real Estate Investment Portfolio With Our Team? Give Our REI Legal Team A Call Now!512-757-3994