January 19th, 2019 at 7:29 am

Question: I see agents fill out the C.A.R. forms in all sorts of different ways when the seller or buyer is a trust. Let’s say, for example, that Martin King, Jr. is the trustee of the Martin Luther King, Jr. and Coretta Scott King Family Trust dated January 15, 2009. What is the proper way to complete the C.A.R. forms if the trust is selling or buying property?

Background: Before C.A.R. created the Representative Capacity Signature Disclosures (RCSD-S and RCSD-B), every time that Martin had to sign his name as a trustee, he would be required to sign his individual name, followed by writing out the words, “as trustee of the Martin Luther King, Jr. and Coretta Scott King Family Trust dated January 15, 2009.” Obviously, this was a very tedious endeavor for a sales transaction, given all the signatures required for the contract, disclosures, and other documents. Hence, C.A.R. inserted a “Representative Capacity” provision in its listing and sales agreements. When checked, it provides that everywhere the trustee’s signature (or initials) appear on the sales documents, the signature will be deemed to be in his or her signature in a representative capacity, not individual capacity.

Answer: The C.A.R. forms can be completed in many different, but acceptable ways when a seller or buyer is a trust. However, the drafters of the C.A.R. forms intended them to be completed as follows:

  1. Step #1: Fill out the listing agreement or purchase agreement. For the name of the “Seller” or “Buyer,” insert the name of the trustee, followed by a comma and the word “trustee.” In our example, the “Seller” or “Buyer” would be “Martin King, Jr., trustee.” If there were 2 co-trustees, it would be, “Martin King, Jr., co-trustee, Coretta King, co-trustee.” One reason for filling out the form in this manner is to have Martin’s name printed directly below his signature line to prompt him to sign “Martin King, Jr., trustee,” rather than something else.
  2. Step #2: Check the “Representative Capacity” box directly above the signature line on the listing or purchase agreement.
  3. Step #3: Fill out and attach the RCSD-S or RCSD-B. Insert “Martin King, Jr.” or “Martin King, Jr., trustee” as the “Seller” or “Buyer.” Check the box in paragraph 1A for a trust, and then insert the full name of the trust.
  4. Step #4: Obtain a copy of the Certification of Trust as soon as possible to verify that Martin is the trustee, and that he is the only person who must sign on behalf of the trust. Both the Representative Capacity box in the listing agreement, and paragraph 19 of the purchase agreement, state that, within 3 days after acceptance, the trustee must provide the Certification of Trust or other evidence of his or her authority to act in a representative capacity.

-Thank you to Myrna Tollett (Calabasas Office) for suggesting this week’s legal tip.

-Happy Martin Luther King Jr. Day everyone! We have a dream.

Copyright© 2019 Berkshire Hathaway HomeServices California Properties (BHHSCP). All rights reserved. Any unauthorized reproduction or use of this material is strictly prohibited. This information is believed to be accurate as of January 21, 2019. It is not intended as a substitute for legal advice in individual situations, and is not intended to nor does it create a standard of care for real estate professionals.

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