Even with a trust, people are often confused about what they may need to do regarding their real estate. Apart from ensuring that the real estate you own is deeded into your trust, there are some common, recurring issues that can arise with real property.
Refinancing — If you refinance, and your lender makes you take your property out of your trust, then tell your mortgage broker or loan officer, and your escrow officer, that you want a deed and (for California property) a Preliminary Change in Ownership Report (“PCOR”) prepared to place the property back into your trust, which you will sign when you sign your loan documents. Often, the title company handling the refinance will record the deed to put the property back into trust for you, but if the company doesn’t handle the recording, then you can arrange to record the deed, most commonly with the help of the lawyer who drafted your trust documents.
Real estate sale — Sometimes, when you sell real estate held in your trust, the title company will “demand” that you open a bank account in your trust’s name or else they will not remit funds to you. When this issue comes up, it’s always at the last possible moment, which causes unnecessary stress. There are two ways you can instruct the escrow officer to avoid this headache. First, you can assign your sale contract from yourselves as trustees of your trust, to yourselves as individuals. At the time you accept a buyer’s offer, direct your real estate agent to include an Addendum to assign your contract (which includes receiving the money from escrow on closing) out of your trust to yourself. The second method (if the title company refuses to accept the first option and you can’t fire them) is to instruct the escrow to prepare a deed so you can remove the property from your trust to yourself, the same way you would if your lender required removing property from a trust for a loan.
New real estate purchase — Take title to newly purchased or acquired real estate as trustee(s) of your trust. You can tell your real estate agent and your escrow officer that you have a trust. The escrow officer may ask to see your trust, so their staff can prepare the necessary documents. If you take out a loan to buy the property, and your lender tells you that you can’t hold title in your trust when they lend you the money, then see the paragraph above on refinancing for more information on what to do.