Rental registered as a "trust"

[Cross Hair]

What is the name of your state (only U.S. law)? Ohio

I started the process of buying a rental property that was "for sale by owner". The title company informed me the the property was registered as a "trust" and they needed the appropriate paperwork regarding that. When I contacted the owner he said they have no paper work regarding the trust, when they bought the property 12 years ago their attorney told them it was better to register as a trust than an LLC. He said they really didn't understand why except to save on taxes, never asked the attorney any questions and never received any documents regarding the trust. I asked who the recipients of the trust are and he said he didn't really know but figured it was between him and his wife. He did contact the attorney involved when he bought the place but she hasn't responded yet.

This is something I never encountered before and is throwing up a red flag for me, I am considering stepping away from the deal.

Can someone educate me on why this rental was set up as a trust and if a sale of the property could become an issue? There is still a mortgage on the property but that is of no concern, just the trust registration issue.

Thank you

 

[FlyingRon]

A trust really only ends up saving estate taxes and then only in extremely limited circumstances. Anyhow, there HAS to be a document establishing the trust. Every time I've conveyed real estate in or out of the trust, I've had to show the trust document. Without it, there's no way to know if the trustee has the authority to sign the deeds. He needs to find the trust document (the lawyer is probably the best place to start).

The best way for you to handle it is to insist on owner's title insurance at closing.

 

[NIV]

There are many purposes for a trust owning real estate. I won't guess as to why. But, as to recording title:
http://codes.ohio.gov/orc/5301.255

Until the memorandum of trust is recorded (Or, something similar.), the title company will have an objection to insuring title.

 

[Dandy Don]

It means that the property is owned by a trust.

 

[Cross Hair]

The seller came up with the trust documents, they had them all along and just didn't realize it. Their recollection is the attorney set it up that way to "protect their asset" in case of a law suit, it was less expensive setting up the trust than an LLC.

Thanks for the input.