Advice please.

Asked by Animal Lover, San Clemente, CA Mon Feb 8, 2010

Mom past on in June. She had a living trust. Sister is executor. Can my sister go agains't what my Mom had in the trust, and sell to ANOTHER sister far less then the home is worth. Mom wanted the home appraised, which it has not, and sold within 6 months. And the home split between 4 of us. Mom have no clause in her living trust, for any of the siblings to buy the home. Appraised, and then sell on the appraised value. Why does a loan company wish to see a compay of the trust, they have to business seeing a copy do they. What would they be looking for. To me they have no right to see a copy of the trust. But the home would be sold far less then what mom wanted it to sell for.

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Don Tepper, Agent, Burke, VA
Mon Feb 8, 2010
You were OK up to your complaints against the lender.

Let's take it step by step. Disclaimer: I'm neither an accountant nor a lawyer. You need the assistance of both.

First, as executor, your sister has a fiduciary duty to the estate. And she has a responsibility to execute your mom's directives. What your mom requested is pretty standard, and a pretty good way to handle things. I personally would suggest you contact the lawyer who helped your mom create the living trust and get his advice on how best to make sure that your mom's wishes and directives are followed.

Had one of your siblings wished to buy the home--or if one still does--that probably can be accomplished within the terms of the trust. It's appraised, per her wishes. It's put on the market, per her wishes. Then one of the siblings can buy it for full, fair market value. That'd be entirely in accordance with her wishes, and would be fair to all the children. The problem arises because the executor is trying to cut a side deal with another sibling.

Again, start with the lawyer who drew up the papers. If he declines, ask for a referral. Or look for another good estate planning lawyer in your area.

As for the loan company wishing to see a copy of the trust: When property ownership is transferred, it routinely would trigger the "due on sale" clause in the mortgage. There are exceptions under the Garn St. Germain Act--and transfer into a trust, and certain other related actions are permitted. But the mortgage requires the lender's pre-approval before a transfer takes place. They've got a vested interest in what's going on. They want to make sure that ownership isn't being transferred in a way that would trigger the due-on-sale clause that isn't protected by one of the exceptions in Garn St. Germain. After all, the security for their loan is the property itself. Check with a lawyer, but I suspect the loan company has every right to view the trust document.

So: Check with the lawyer who did the living trust for your mom. Find out how your mom's wishes, as reflected in the trust, can be carried out. And ask whether the lender can see the trust document.

Hope that helps.
1 vote
John Juarez, Agent, Fremont, CA
Mon Feb 8, 2010
Your mother’s trust is a legal document and the trustee is bound by it. Without seeing the trust, I have no idea what the trustee’s powers are. Not that it matters since I am not an attorney. It would not be of any real value if I did see the trust which is my way of saying that I think you need to seek legal advice if you do not believe you sister is fulfilling her duties as trustee.

Does the lender have a right to ask to see the trust? Of course they do. The lender wants to know who the trustee is and the powers of the trustee wields. The lender needs to know they are dealing with the person who is legally able to make decisions.
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, ,
Mon Feb 8, 2010
Let's get one thing out of the way right off the bat, a lender can ask you for your third grade report card if they want. That was not my original line, someone else said it on Trulia, but it is true. Your choice is, provide what they want, or they will deny your loan. If the trust leaves the house to 4 of you, and one wants to buy the other 3 out for the appraised value, then you should have no objection to that as long as you get what you deserve. Let's say, to make things easy, that the home is worth $100,000. That is $25,000 for each of you. If your sister is buying it from the remaining 3 for $75,000, then she is really paying $100,000 for it, her $25,000 share as her down payment, so to speak, and the rest is for your 3/4th of the total. If, however, she wants to pay the 3 of you only $50,000, then you are not getting a fair deal, and you should not allow it. Then you would have to consult an attorney and have them represent you to get what you deserve. Just don't pay the attorney more than the difference is.
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Anna M Brocco, Agent, Williston Park, NY
Mon Feb 8, 2010
This is a question for an attorney, and recommend you do so if you want to keep peace within your family--while at the same time making sure your Mom's wishes are carried out to the best of everyone's ability and with a fair outcome for all.
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Dallas Texas, Agent, Dallas, TN
Mon Feb 8, 2010
Recommend have all reviewed by a real estate attorney.

It depends all who is on title how it is set up and etc. in order convey the property to a new home owner.
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