The Harbor Trust owns a commercial lot. A purchase contract for the lot was signed only by Leo, one of the trust beneficiaries, even though the trust instrument gives signing authority solely to Mia, the trustee. If the problem is not cured before closing, what is the main legal issue?
Correct Answer
A) Leo lacks authority to bind the trust or convey trust-owned real estate when the trustee holds legal title and exclusive signing power
Trust-owned real estate is ordinarily controlled by the trustee or another person authorized under the trust instrument. Because Mia holds the relevant authority and Leo is only a beneficiary, Leo's signature alone does not ordinarily bind the trust or support a valid conveyance of trust title.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Joint tenancy is a form of co-ownership in which two or more persons hold equal, undivided interests in property with the right of survivorship. When one joint tenant dies, their interest automatically passes to the surviving joint tenants.
A leasehold estate grants the right to possess and use property for a defined period of time, without conferring ownership.
A life estate is a freehold estate that grants ownership rights for the duration of someone's life.
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