Legal Question in Real Estate Law in California

Re: quitclaim of property in a trust

If the property was in the trust, the person should have executed the quitclaim deed as "person xyz, as trustee of the xyz trust." She held title as the trustee, and should have transferred title as the trustee.

Re: quitclaim of property in a trust

The prior answer is technically correct in that a trustee shouldn't sign documents relating to trust property without indicating that she is signing in her capacity as trustee and not in her individual capacity.

Unfortunately, that begs the question as to whether the quitclaim deed is valid, or what its effect, if any, may be.

It turns out this is a difficult question to answer; although it must happen with some regularity, in a couple hours of concerted research I could not find a statute, case or practice-manual discussion covering this situation.

So, I'll give you an answer or two fabricated from application of broader legal principles to this situation. I'll be interested to see if any other LawGuru attorney can provide a more certain response.

First, generally speaking, a trust is not an entity and cannot hold title to property. Legal title is held by "Person XYZ" in trust for (the beneficiary). Consequently, I believe that if XYZ executes a quitclaim deed conveying her right, title and interest in Blackacre, and Blackacre's legal description is accurate in the deed, the deed is effective to convey both XYZ's interest as trustee AND her personal interest as well, if any. Probably XYZ doesn't have an interest in Blackacre outside her capacity as trustee, but I think that's the legal effect of the omission of reference to the trust. In other words, I think the deed is effective.

This view is reinforced by the fact that an agent can sign a deed on behalf of the grantor if the agent has written authority. Since the trust instrument, which is in writing, presumably gives the trustee the power to sell trust real property, it could be found that the trustee is an authorized agent of the trust as well as the trustee. Further, it could be argued that XYZ is a common-law attorney in fact with power of attorney.

A final note is that if the grantee is a bona fide purchaser for value, without notice of the grantor's holding title as trustee rather than as beneficial owner in her own right, the grantee is further protected from challenges to the validity of the deed or the capacity of the person executing it to do so.

So, in a nutshell, unless there is fraud present, I believe there is a strong argument that the deed is effective to convey the trust's interest, and probably XYZ's interest, if any, to the grantee. I'm not 100% certain, to be sure!