When a Trust is Party to a Sale Agreement

Posted on: October 23rd, 2018 by Francois Hagen

Problem scenario:

The ABC Family Trust sells a sectional title unit to X. The trustees of the trust, authorised by valid Letters of Authority issued by the Master of the High Court, are A and his children B and C. A signed the agreement and provided the Letters of Authority and trust deed to the estate agent and purchaser, X. Trustee A subsequently reconsiders and, citing some dispute with the body corporate for thwarting efforts to obtain the levy clearance necessary for transfer, alleges that the Trust is unable to proceed. X consults his attorney as he believes the Trust is in breach.

Solution:

Scenarios similar to the above arise often in practice. The problem faced by X is that a Trust may only act through its trustees and as allowed by the trust deed. One trustee cannot act alone without the others. Unless A was authorised, in a written resolution granted by all the trustees beforehand, to sign the sale agreement, then the sale agreement was void. Depending on the circumstances, the purchaser may seek other remedies.

Speak to your STBB conveyancer for assistance in all your property transactions, before putting pen to paper.

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