STANDARD NO. 404

PROBLEM:

Should the examiner require evidence of the authority of the trustee to convey:

A. If the preceding conveyance in the chain of title describes the grantee in a trust capacity?

B. If the preceding conveyance in the chain of title describes the grantee in a trust capacity, and the deed is from the purported successor trustee of the grantee in a trust capacity?

C. If the preceding conveyance in the chain of title describes the grantees in a trust capacity, and the deed is from at least one but fewer than all of the grantees in a trust capacity?

D. If the preceding conveyance in the chain of title is to a trust, and no trustee of that trust is named as grantee?

RECOMMENDATION:

A, B, C and D:

No, absent knowledge of lack of authority, unless in a current conveyance (not already of record) (1) the grantee from the trustee is a beneficiary of the trust, or (2) the examiner has knowledge that the grantee from the trustee is not dealing in good faith.

DISCUSSION:

A. 18-B M.R.S. §1012(2) in effect on and after July 1, 2005 relieves persons acting in good faith who are not beneficiaries from any duty "to inquire into the extent of the trustee's powers or the propriety of their exercise." From January 1, 1981 through June 30, 2005, the provisions of 18-A M.R.S.A. § 7-406, in the absence of actual knowledge of impropriety, provide similar protection. If the conveyance in question occurred prior to January 1, 1981, the possibility of a question arising as to the authority of the trustee to convey should be treated as too remote unless the examiner has notice of an adverse claim. If the deed from the grantee-trustee is of record at the time of the examination, there is no duty to inquire absent knowledge of the trustee's lack of authority.

B. See Discussion in A above.

Caveat: The protections described above are afforded only to persons who deal with the trustee (or former trustee without knowledge that the trusteeship has terminated). Therefore, in a current conveyance the incumbency of the person or entity purporting to be the trustee should be ascertained to the examiner's reasonable satisfaction. The examiner in a current conveyance from a trustee may request a certification of trust under 18-B M.R.S. §1013 and obtain the protections afforded thereunder.

Preferred Practice: The preferred practice in a current conveyance (not already of record) is to obtain evidence of the successor's appointment or succession to said capacity and to include a recitation as to the successor's appointment or succession to said capacity in the deed of conveyance or otherwise on the record.

C. See Discussion in A above and Caveat in B above. There are several reasons (such as death, incapacity or majority decision) one of the trustees may not join in the deed. See 18-B M.R.S. §703.

Preferred Practice: The preferred practice in a current conveyance (not already of record) is to obtain evidence of the authority of fewer than all of the grantee trustees to convey and to include a recitation as to the authority of fewer than all of said grantee trustees to convey in the deed of conveyance or otherwise on the record.

D. The preferred practice is for conveyances to be made to and from the trustees of a trust in their trust capacity. However, a conveyance to the trust "is deemed to have been made to all of the trustees of the trust in their capacity as trustees of the trust, as though they had been named as grantees instead of the trust." 33 M.R.S. §851-A.

See Discussion in A above and Caveat in B above.

Preferred Practice: The preferred practice in a current conveyance (not already of record) is to obtain evidence of the grantor's appointment or succession to said capacity and to include a recitation as to the grantor's appointment or succession to said capacity in the deed of conveyance or otherwise on the record.

First adopted August 25, 1960; amended June 19, 1975, December 7, 1983 and February 13, 2007. Formerly Title Standard No. 38.