I'm working on a deal in AZ where there are multiple properties listed under the deceased fathers name (not under his trusts name) and the trustees want to sell the properties to me. Because of the value of this deal, I would like to self close but because there is an existing trust but the properties are not under the trust I am hesitant.
How would I go about closing this deal myself? Do I need to get the trustees to first quiet title the properties from the deceased persons name into the trust, or would recording the title with a death certificate while having the trustees sign be sufficiant?
I have reviewed the trust documents and the trustees match up with the sellers info.
I usually would leave this for the title company, but feel like I should learn how to deal with this myself.
Hi @Greg-Morris, hopefully others who are more experienced with self-closing, and possibly with any quirks of working in AZ, can chime in as well, but I have worked fairly closely with the title companies that I've used on three closings involving estate / inheritance situations, so far. Do you have a copy of the deceased father's will, and do you know if the will was recorded with the county where the property is located?
In the the three deals I did involving inherited property, in two different states (neither of which was AZ), a key item appeared to be having the will and/or "list of heirs" document recorded with the county. In my novice level of experience, it seems to me that best case for your situation might be that a will exists, and it names either the trust, or the family members/trustees that you're working with, themselves personally, as the heirs of either the whole estate, or this property specifically. If you had that -- still don't take my word for it and think about running this by someone who knows how to do title work properly in AZ -- but it seems to me that you would have documented clear chain of title to the people that you're intending to buy from, provided that the will is recorded with the county.
On the other hand, if the will indicates that upon the father's death any people or entities other than the trust or trustees that you're currently dealing with would inherit the property, or the balance of the father's estate which was not already part of the trust (if the property is not named specifically), that would present an issue that others far more experienced than myself would definitely have to advise on.
@Greg-Morris I think the short answer is, this is something a title company should handle for you. They'll be able to spell out exactly what needs to happen and who needs to provide it, so you don't have to work on any of this or possibly mess something up. If there are multiple properties involved, and if those properties are worth anything substantial, there should be enough value to cover the added cost of closing with a title company.
When you come across super-complicated closings like this, don't feel like you need to bend over backwards to make it work. If it's really a good deal, the value will be there in the properties to cover these complexities. Similar to if a property requires a survey, wetland delineation, environmental work, a huge delinquent tax bill or otherwise, the numbers need to work even with these added costs, and if they don't, then it's probably not a great deal in the first place.
I've done some self-closings that involved trusts, but they weren't nearly as complicated as what this sounds like (and even then, it was a lot to handle). Closing in-house makes sense for the super-cheap deals where you're buying one property from one or two individuals, all of the people are available to sign and any additional documentation is available in a neat package. From what I'm reading above, that's not what this sounds like.
Thanks for the thoughtful replies David and Seth. I agree that there are too many moving parts for my experience. My main motivation to self close was to be able to buy all of persons properties at one time for his convenience, including some low value properties I usually do not deal with. A little value add for the owner. But Seth, you are correct, the deal should have more than enough meat on it to cover closing costs. It looks like only a few of these properties would be worth it.
I have to admit, I let my emotions drive me towards this deal. I have targeted higher value properties in my last few mailers with no deals and am anxious to get out of my dry spell.
@greg-morris A little late to the party but my two cents follows. Typically a Living Trust and Will work together. When the Trust is drawn up and funded a new ‘Pour Over’ will is also drawn up and executed. Pour Over is a clause in the will that says ‘anything in the estate that is not in the trust, should be in the trust and should be handled under the guidelines of the trust’. The will ‘pours over’ any estate assets outside the trust putting them inside the trust - except maybe some life insurance I seem to recall.
If the will does not have this clause and the property is vested outside the trust, then it is likely part of the probate estate. If it is of substantial enough value it should be transferred through a probate court action, hearing … - read as Lawyers, Guns and Money, oh boy!
Or if you did your own title search and you are comfortable with the results, throw caution to the wind, pass on the title insurance, self close with a warranty deed or maybe even a quitclaim. In a self closing I do not see much added value in a warranty deed that is not insured. Sure the seller is making some representations but if he is defrauding you, I’m not sure they are worth the value of the paper they are written on. I hope it worked out well for you.