January 4, 2013
Authored by: Luke Lantta
It’s a pretty common mistake for litigators in Georgia unfamiliar with fiduciary litigation – naming a trust as a party to a lawsuit. Apparently, as we recently saw in Ford v. Reddick, it’s a mistake made in real estate transactions, too.
It’s hard to blame them because, on the surface, the Georgia Code’s many references to trusts may unwittingly suggest to some that a trust is itself a legal entity. But, under Georgia law, it’s not.
So what tripped up the real estate transaction in Ford?
It’s a straightforward set of facts. Kaiser Ford, as attorney-in-fact for Ruby Lee Gloster, executed two warranty deeds conveying Gloster’s real property to “Morison Outreach, a Trust.” Gloster sued to set aside those deeds. Gloster contended that the deeds were invalid as they conveyed property to a trust instead of a trustee. The trial court and Georgia Court of Appeals agreed.
It’s well-settled law that a deed that does not properly designate a grantee does not convey title. Under Georgia’s Trust Code, in order for a deed to convey property to a trust, the trustee must be designated as the grantee of legal title. In other words, when it comes to property transactions in Georgia, a trust can only convey or receive property through its trustee.