QUESTION

Is the lease agreement with my father, as an individual, also the trustee at the time of signing the lease, a valid lease agreement with the trust?

Asked on Apr 26th, 2013 on Trusts and Estates - California
More details to this question:
My brother and I are beneficiaries and current court appointed co-trustees of our grandparents revocable living trust. My grandparents were not trustees, only trustors. My father was the only trustee until a few years ago when we finally found out about the trust and made him resign after we found that he was using the rental income from the trust property for his personal use and placing it into his persanal bank account. The problem now is that a commercial tenant has a lease agreement with my dad as an individual, with no mention of the trust, in the lease agreement. My father signed the lease as an individual and not as trustee. As a result, the tenant has been paying the rent directly to our dad in his personal name and not the trust, the legal owner of the property. The tenant refuses to recognize the trust after we have sent numerous letters directing them to send the checks to the trustees in the name of the trust. My question is, is this lease valid? The terms of the lease are 50 years with a 50 year option. The property was owned by the trust many years prior to the lease agreement being signed.
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1 ANSWER

Taxation Attorney serving Santa Monica, CA at Lyster, Inc.
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Record title should govern.  The last recorded deed in the chain of title will tell who or what entity owns the property.  Assuming the trust instrument doesn't specify that the trust assets are to be distributed outright to your dad, and that the trustee of the trust is currently in title, your dad had no right to lease the property individually nor to receive the rents.  You will need to evict the tenant if the tenant will not recognize that you are the trustee of the trust which owns the property.  And you could also sue your dad for converting assets not owned by him, or for breaching his fiduciary duties as trustee (while he was serving).
Answered on May 02nd, 2013 at 7:25 PM

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