Selling real estate in a living trust

With the increasing popularity of living trusts holding real property in Southern California, Esquire Real Estate has seen an uptick in clients utilizing the attorney-broker services of Esquire Real Estate to sell property inherited through a living trust.  A living trust (also known as an inter vivos trust) is a trust created during the lifetime of the grantor or trustor with specified beneficiaries that receive the trust property upon the death of the trustor, or as otherwise specified in the trust agreement.  Living trusts are helpful for avoiding the time and expense of probate and simplifying the process for the heirs following the death of the trustor.

In the context of a home or other property, generally, following the death of the trustor (usually the original owner of the real property), the trust document names a successor trustee or co-trustee to manage and administer the estate and sell the property in accordance with the trust agreement.  The successor trustee has several duties and responsibilities in the timely sale of the trust real property, the most common of which are summarized below:

Trust Listing Agreement:

When the property is ready to be placed on the market, the successor trustee, acting as the seller in the capacity of trustee of the trust, will execute a trust listing agreement with a real estate broker for the sale of the property. 

Reduced Disclosures:

The seller/successor trustee of a living trust is exempt from many of the common disclosure requirements and in particular, the Transfer Disclosure Statement, Natural Hazard Disclosure Statement, statement of compliance regarding operable smoke detectors, and provision of the earthquake safety guide.  However, the seller/successor trustee of a living trust is not exempt from disclosure of material facts, natural hazard zones, lead-based paint, water heater compliance, and carbon monoxide detector installation in the home, Megan’s Law Database Disclosure, and tax withholding.

Affidavit of Death of Trustee and Appointment of Successor Trustee:

Before the close of escrow, the successor trustee will be required to complete, execute, and have notarized an Affidavit of Death of Trustee and Appointment of Successor Trustee.  The Affidavit states that the original trustor died on a specific date and that the trust agreement named the successor trustee as successor trustee.  A certified copy of the original trustor’s Certificate of Death must be attached to the Affidavit.

These are only a few of the legal requirements and features of selling California real property through a living trust after the death of the original trustor.  If you have any questions regarding living trusts or the sale of your real property through an attorney-broker, please contact Esquire Real Estate.