Evictions and Trusts
By Jeffrey S. Watson
Not long ago, I did a short series on trusts being used by real estate investors. A memo came across my desk recently from a highly-respected eviction attorney in Cleveland, Ohio. The Cleveland Municipal Housing Court is now doing something that will probably spread to other states and cities. They are now requiring additional documentation when the owner of the property is a trust and the trustee is doing the eviction. Let me remind you of a couple of things.
The trustee holds title to the property pursuant to the terms of a Trust Agreement. The Trust Agreement should be confidential, but it is good practice to always have an Affidavit or Memorandum of Trust recorded on public record at the same time the property is transferred into the trust via a Warranty Deed to Trustee. You need to be prepared to attach a copy of the recorded Affidavit or Memorandum of Trust (which should be no more than 2-3 pages long) and put it as an exhibit to your eviction documents to establish that the correct owner of the property (the trustee) is the one moving forward with the eviction. This will avoid having to show up in court with the entire Trust Agreement (which could be 10-50 pages long).
There are extra burdens of documentation being placed on attorneys and landlords seeking to do evictions as a result of bad practices by real estate investors over the years and a major shift in policy by many of the large, urban housing courts. These extra burdens include being able to prove the one filing the eviction is the current owner of the property. To do that, you need to have a copy of the deed and either the LLC Operating Agreement or statement of good standing from the Secretary of State if the owner is an LLC, or a copy of the recorded Affidavit or Memorandum of Trust if the owner is a trust.
When you have to show up in housing court to do an eviction, it’s better to show up overprepared and over-documented, not needing half of what you bring, rather than be missing that one crucial piece of paper they want. One of the worst things you can do when it comes to an eviction is being in the right place at the right time with the wrong paperwork.
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Jeffery S. Watson is an attorney who has had an active trial and hearing practice for more than 25 years. As a contingent fee trial lawyer, he has a unique perspective on investing and wealth protection. He has tried over 20 civil jury trials and has handled thousands of contested hearings. Jeff has changed the law in Ohio four times via litigation. His articles are also regularly featured the RE Journal. Read more of his viewpoints at WatsonInvested.com.