The Oklahoma Bar Journal January 2023

T ransactional L aw

You Shall Not Pass … Or Shall You?

By Rhonda J. McLean Should a Title Examiner Object to a Conveyance Wherein a Trustee Conveys Trust Property to or From Themselves?

A S A TITLE EXAMINER, 1 YOU SEE MANY THINGS THAT MAKE YOU GO, “HMM.” Some of them you do not like, but you have the protection of certain presumptions, the Marketable Record Title Act or the Simplification of Land Titles Act to rely on. Other times, you must make a judgment call about whether something that feels “icky” rises to a level of litigious uncertainty that prevents the grantee’s title from being marketable. 2

and limitations having been recorded in the county where the real estate is located.

One of those judgment calls is when you see a conveyance from a trustee to themselves, individually – particularly when the trustee is not the settlor of the trust, or the trust is irrevocable. Often, a successor trustee is also the sole beneficiary of that property, so a deed from the trustee to themselves is not only warranted, it is required. But when reviewing the record, a title exam iner 1) likely hasn’t reviewed the terms of the trust and 2) cannot tell from the face of the document that it is for the purpose of distributing the trust asset to the sole benefi ciary. 3 Further, without specific language in the conveyancing document, a title attorney has no way to distinguish a deed made for distribution purposes versus a sale of trust assets. 4

OKLAHOMA TITLE EXAMINATION STANDARDS When determining whether to make objection to an instrument, the Oklahoma Title Examination Standards (OTES) are, or should be, a title examiner’s first stop. 5 OTES §15.1 states: The trustee of an express trust has the power to grant, deed, convey, lease, grant easements upon, otherwise encumber and execute assignments or releases with respect to the real property or interest therein which is sub ject to the trust. A trustee’s act is binding upon the trust and all beneficiaries thereof, in favor of all purchasers or encumbranc ers without actual knowledge of restrictions or limitations upon the trustee’s powers by the

This standard is based on the language of 60 O.S. §§171 et seq. , 175.7 and 175.45. These statutes, in summary, provide that when dealing with an express trust, any conveyance by the trustee is binding upon the trust in favor of purchas ers without notice of any restrictions or limitations established upon the trust by the trustee. Further, 60 O.S. §175.24(2) states a trustee has the power to grant options and sell real or personal property at public auction or private sale. All of this would lead one to believe OTES §15.1 is spot on, and without anything to the contrary in the record, a title examiner should presume the trustee’s conveyance is valid. However, the standard does not address or refer to 60 O.S. §175.11, which states:

terms of the trust, and with out constructive knowledge imposed by the trust instru ment containing restrictions

18 | JANUARY 2023

THE OKLAHOMA BAR JOURNAL