Quick Answer
Investors can hold real estate through properly structured trusts, but the title company needs to determine the trust arrangement, who the trustee is, and whether the trustee has authority to enter into the transaction. The specific requirements depend on the trust type and the title insurer's underwriting guidelines.
Trusts are another common vehicle for holding investment real estate. A trust can provide estate planning benefits, privacy, and certain asset protection features. However, title companies need specific information about the trust to insure the transaction.
Who Has Authority to Sign
When a trust is purchasing or selling property, the trustee typically has authority to act on behalf of the trust. The title company will typically need to review the trust document to confirm who the current trustee is and that the trustee has authority to enter into the specific transaction. If there are co-trustees, the title company needs to confirm how many must sign.
The trust document may also specify limitations on what the trustee can do. Some trusts require beneficiary consent for real estate transactions. Others restrict the types of transactions the trustee can enter into. The title company reviews these provisions to ensure the transaction is within the trustee's authority.
Do Not Confuse a Trust With an LLC
A trust and an LLC are different legal structures with different requirements for title. A trust is not a separate legal entity in the same way an LLC is. Title to trust property is typically held in the name of the trustee. The trust document governs authority, while an LLC's operating agreement serves a similar function. The title company will treat them differently.
For more on trust ownership of real estate, see can a trust hold real estate in our existing knowledge base.
Requirements may vary by jurisdiction and transaction. Consult qualified legal, tax, lending, or other professionals for advice on your specific trust structure and transaction.