Senate Bill sb1956
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Florida Senate - 2006 SB 1956
By Senator Aronberg
27-912A-06
1 A bill to be entitled
2 An act relating to land trusts; amending s.
3 689.071, F.S.; creating the Florida Land Trust
4 Act; providing definitions; deleting a
5 requirement that a land trustee be qualified to
6 act as a fiduciary; deleting obsolete
7 references to "dower" and "curtesy"; providing
8 certain rights, liabilities, and duties of land
9 trust beneficiaries; providing that the
10 principal residence of a beneficiary which is
11 held in a land trust may be entitled to the
12 homestead tax exemption; providing for the
13 appointment of successor trustees; providing
14 requirements for declarations of appointment;
15 providing that a trustee of a land trust may
16 also be a creditor of the trust or of a
17 beneficiary of the trust; amending s. 201.02,
18 F.S., relating to the tax on deeds and other
19 instruments; conforming a cross-reference;
20 providing for applicability of the act to all
21 land trusts whenever created; providing an
22 effective date.
23
24 Be It Enacted by the Legislature of the State of Florida:
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26 Section 1. Section 689.071, Florida Statutes, is
27 amended to read:
28 689.071 Florida Land Trust Act trusts transferring
29 interests in real estate; ownership vests in trustee.--
30 (1) SHORT TITLE.--This section may be cited as the
31 "Florida Land Trust Act."
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1 (2) DEFINITIONS.--As used in this section, the term:
2 (a) "Beneficial interest" means any interest, vested
3 or contingent and regardless of how small or minimal such
4 interest may be, in a land trust which is held by a
5 beneficiary.
6 (b) "Beneficiary" means any person or entity having a
7 beneficial interest in a land trust. A trustee may be a
8 beneficiary of the land trust in which such trustee serves as
9 trustee.
10 (c) "Land trust" is not the creation of an entity, but
11 means any express agreement or arrangement whereof a use,
12 confidence, or trust is declared of any land, or of any charge
13 upon land, for the use or benefit of any beneficiary, under
14 which the title to real property, both legal and equitable, is
15 held by a trustee, subject only to the execution of the trust,
16 which may be enforced by the beneficiaries.
17 (d) "Holders of the power of direction" means the
18 persons or entities having the authority to direct the trustee
19 to convey, execute a mortgage, distribute proceeds of sale or
20 financing, and execute documents incidental to the execution
21 of a land trust.
22 (e) "Trustee" means the person or entity designated in
23 a trust instrument to hold legal and equitable title to the
24 land trust property.
25 (3)(1) OWNERSHIP VESTS IN TRUSTEE.--Every conveyance,
26 deed, mortgage, lease assignment, or other instrument
27 heretofore or hereafter made, hereinafter referred to as "the
28 recorded instrument," transferring any interest in real
29 property in this state, including, but not limited to, a
30 leasehold or mortgagee interest, to any person or to any,
31 corporation, bank, trust company, or other entity duly formed
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1 under the laws of its state of qualification qualified to act
2 as a fiduciary in this state, in which recorded instrument the
3 person, corporation, bank, trust company, or other entity is
4 designated "trustee," or "as trustee," without therein naming
5 the beneficiaries of such trust, whether or not reference is
6 made in the recorded instrument to any separate collateral
7 unrecorded declarations or agreements, is effective to vest,
8 and is hereby declared to have vested, in such trustee full
9 rights of ownership over the real property or interest
10 therein, with full power and authority as granted and provided
11 in the recorded instrument to deal in and with the property or
12 interest therein or any part thereof; provided, the recorded
13 instrument confers on the trustee the power and authority
14 either to protect, conserve and to sell, or to lease, or to
15 encumber, or otherwise to manage and dispose of the real
16 property described in the recorded instrument.
17 (4)(2) NO DUTY TO INQUIRE.--Any grantee, mortgagee,
18 lessee, transferee, assignee, or person obtaining
19 satisfactions or releases or otherwise in any way dealing with
20 the trustee with respect to the real property or any interest
21 therein properties held in trust under the recorded
22 instrument, as hereinabove provided for, is not obligated to
23 inquire into the identification or status of any named or
24 unnamed beneficiaries, or their heirs or assigns to whom a
25 trustee may be accountable under the terms of the recorded
26 instrument, or under any unrecorded separate declarations or
27 agreements collateral to the recorded instrument, whether or
28 not such declarations or agreements are referred to therein;
29 or to inquire into or ascertain the authority of such trustee
30 to act within and exercise the powers granted under the
31 recorded instrument; or to inquire into the adequacy or
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1 disposition of any consideration, if any is paid or delivered
2 to such trustee in connection with any interest so acquired
3 from such trustee; or to inquire into any of the provisions of
4 any such unrecorded declarations or agreements.
5 (5)(3) BENEFICIARY CLAIMS.--All persons dealing with
6 the trustee under the recorded instrument as hereinabove
7 provided take any interest transferred by the trustee
8 thereunder, within the power and authority as granted and
9 provided therein, free and clear of the claims of all the
10 named or unnamed beneficiaries of such trust, and of any
11 unrecorded declarations or agreements collateral thereto
12 whether referred to in the recorded instrument or not, and of
13 anyone claiming by, through, or under such beneficiaries.
14 However, this section does not prevent including, and without
15 limiting the foregoing to, any claim arising out of any dower
16 or curtesy interest of the spouse of any beneficiary thereof;
17 provided, nothing herein contained prevents a beneficiary of
18 any such unrecorded collateral declarations or agreements from
19 enforcing the terms thereof against the trustee.
20 (6)(4) PERSONAL PROPERTY.--In all cases in which the
21 recorded instrument, as hereinabove provided, contains a
22 provision defining and declaring the interests of
23 beneficiaries thereunder to be personal property only, such
24 provision shall be controlling for all purposes when such
25 determination becomes an issue under the laws or in the courts
26 of this state.
27 (7)(5) TRUSTEE LIABILITY.--In addition to any other
28 limitation on personal liability existing pursuant to statute
29 or otherwise, the provisions of s. 737.306 apply to the
30 trustee of a land trust created pursuant to this section.
31 (8) LAND TRUST BENEFICIARIES.--
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1 (a) Except as provided in this section, the
2 beneficiaries of a land trust are not liable, solely by reason
3 of being a beneficiary, under a judgment, decree, or order of
4 court or in any other manner for a debt, obligation, or
5 liability of the land trust.
6 (b) Any such beneficiary acting under the trust
7 agreement of a land trust is not liable to the land trustee or
8 to any other beneficiary for the beneficiary's good-faith
9 reliance on the provisions of the trust agreement.
10 (c) Chapter 679 applies to the perfection of any
11 security interest in a beneficial interest in a land trust.
12 The perfection of a security interest in a beneficial interest
13 in a land trust does not impair or diminish the authority of
14 the trustee under the recorded instrument, and parties dealing
15 with the trustee are not required to inquire into the terms of
16 the unrecorded trust agreement.
17 (d) The beneficiary's duties and liabilities may be
18 expanded or restricted in a trust agreement or beneficiary
19 agreement.
20 (e) Any subsequent document appearing of record
21 whereby a beneficiary of a trust transfers or encumbers the
22 beneficial interest in the trust does not diminish or impair
23 the authority of the trustee under the terms of the recorded
24 instrument, and parties dealing with the trustee are not
25 required to inquire into the terms of the unrecorded trust
26 agreement.
27 (f) The unrecorded trust agreement underlying the
28 recorded instrument may provide that one or more persons or
29 entities have the power to direct the trustee to convey,
30 execute a mortgage, distribute proceeds of sale or financing,
31 and execute documents incidental to the land trust. The power
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1 of direction, unless provided otherwise in the land trust
2 agreement, is conferred upon the holders thereof for the use
3 and benefit of all of the holders of the beneficial interest
4 in the land trust. In the absence of a provision in the land
5 trust agreement to the contrary, the power of direction shall
6 be in accordance with the percentage of individual ownership.
7 In exercising the power of direction, the holders of the power
8 of direction are presumed to act in a fiduciary capacity for
9 the benefit of all holders of the beneficial interest in the
10 trust, unless otherwise provided in the land trust agreement.
11 The beneficial interest is indefeasible and the power of
12 direction may not be exercised so as to alter, amend, revoke,
13 terminate, defeat, or otherwise affect or change the enjoyment
14 of any beneficial interest.
15 (g) A trust relating to real estate does not fail and
16 any use relating to real estate may not be defeated because
17 beneficiaries are not specified by name in the recorded deed
18 of conveyance to the trustee or because duties are not imposed
19 upon the trustee. The power conferred by any such instrument
20 on a trustee to sell, lease, encumber, or otherwise dispose of
21 property therein described is effective and a person dealing
22 with such a trustee is not required to make further inquiry as
23 to the right of such trustee to act and such person is not
24 required to inquire as to the disposition of any proceeds.
25 (h) The principal residence of a beneficiary may be
26 entitled to the homestead tax exemption even if such homestead
27 is held by a trustee in a land trust.
28 (9) SUCCESSOR TRUSTEE.--
29 (a) The provisions of s. 737.309 regarding the
30 resignation of a trustee do not apply regarding the
31 appointment of a successor trustee under this section.
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1 (b) If both the recorded instrument and the unrecorded
2 land trust agreement are silent as to the appointment of a
3 successor trustee in the event of the death, resignation, or
4 termination due to dissolution of a land trustee, or if a
5 trustee is unable to serve, then one or more persons or
6 entities having the power of direction of the land trust
7 agreement may appoint a successor or successors to the trust
8 property by filing a declaration of appointment of a successor
9 trustee in the office of the recorder in the county in which
10 the trust property is located. The declaration must be signed
11 by a beneficiary or beneficiaries of the trust and by the
12 successor trustee, must be acknowledged in the manner provided
13 for acknowledgment of deeds, and must contain:
14 1. The legal description of the trust property;
15 2. The name and address of the former trustee;
16 3. The name and address of the successor trustee; and
17 4. A statement that the successor trustee has been
18 appointed by one or more persons or entities having the power
19 of direction of the land trust, together with an acceptance of
20 appointment by the successor trustee.
21 (c) If the recorded instrument is silent as to the
22 appointment of a successor trustee but an unrecorded land
23 trust agreement provides for the appointment of a successor
24 trustee, then upon the appointment of a successor trustee
25 pursuant to the terms of the unrecorded land trust agreement,
26 the successor trustee shall file a declaration of appointment
27 of a successor trustee in the office of the recorder in the
28 county in which the trust property is located. The declaration
29 must be signed by both the former trustee and the successor
30 trustee, must be acknowledged in the manner provided for
31 acknowledgment of deeds, and must contain:
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1 1. The legal description of the trust property;
2 2. The name and address of the former trustee;
3 3. The name and address of the successor trustee;
4 4. A statement of resignation by the former trustee
5 and a statement of acceptance of appointment by the successor
6 trustee; and
7 5. A statement that the successor trustee was duly
8 appointed under the terms of the unrecorded land trust
9 agreement.
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11 If the appointment of the successor trustee is due to the
12 death or incapacity of the former trustee, the declaration
13 need not be signed by the former trustee and a copy of the
14 death certificate or a statement that the former trustee is
15 incapacitated or unable to serve must be attached to or
16 included in the declaration, as applicable.
17 (d) If the recorded instrument provides for the
18 appointment of a successor trustee and a successor trustee is
19 appointed in accordance with the recorded instrument, no
20 additional declarations of appointment of a successor trustee
21 are required under this section.
22 (e) Each successor land trustee appointed is fully
23 vested with all the estate, properties, rights, powers,
24 trusts, duties, and obligations of the predecessor land
25 trustee, except that the successor land trustee is not under
26 any duty to inquire into the acts or omissions of a
27 predecessor trustee and is not liable for any act or failure
28 to act of a predecessor trustee. A person dealing with the
29 successor trustee pursuant to a declaration filed under this
30 act is not obligated to inquire into or ascertain the
31 authority of such successor trustee to act within and exercise
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1 the powers granted under the recorded instruments or any
2 unrecorded declarations or agreements.
3 (f) A land trust agreement may provide that the
4 trustee, when directed to do so by the beneficiaries of the
5 land trust or their legal representatives, may convey the
6 trust property directly to another trustee on behalf of the
7 beneficiaries or others named by the beneficiaries.
8 (10) TRUSTEE AS CREDITOR.--
9 (a) If a debt is secured by a security interest in a
10 beneficial interest in a land trust or by a mortgage on land
11 trust property, the validity or enforceability of the debt,
12 security interest, or mortgage and the rights, remedies,
13 powers, and duties of the creditor with respect to the debt or
14 the security are not affected by the fact that the creditor
15 and the trustee are the same person or entity, and the
16 creditor may extend credit, obtain such security interest or
17 mortgage, and acquire and deal with the property comprising
18 the security as though the creditor were not the trustee.
19 (b) The fact that a trustee of a land trust is or
20 becomes a secured or unsecured creditor of the land trust, the
21 beneficiary of the land trust, or a third party whose debt to
22 such creditor is guaranteed by a beneficiary of the land trust
23 is not a breach of a fiduciary duty and may not be deemed
24 evidence of a breach of any fiduciary duty owed by the trustee
25 to the beneficiaries.
26 (11)(6) REMEDIAL ACT.--This act is remedial in nature
27 and shall be given a liberal interpretation to effectuate the
28 intent and purposes hereinabove expressed.
29 (12)(7) EXCLUSION.--This act does not apply to any
30 deed, mortgage, or other instrument to which s. 689.07
31 applies.
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1 Section 2. Subsection (4) of section 201.02, Florida
2 Statutes, is amended to read:
3 201.02 Tax on deeds and other instruments relating to
4 real property or interests in real property.--
5 (4) The tax imposed by subsection (1) shall also be
6 payable upon documents which convey or transfer, pursuant to
7 s. 689.071, any beneficial interest in lands, tenements, or
8 other real property, or any interest therein, even though such
9 interest may be designated as personal property,
10 notwithstanding the provisions of s. 689.071(6) s. 689.071(4).
11 The tax shall be paid upon execution of any such document.
12 Section 3. This act is intended to clarify existing
13 law and applies to all land trusts whether created before, on,
14 or after October 1, 2006.
15 Section 4. This act shall take effect October 1, 2006.
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18 SENATE SUMMARY
19 Creates the Florida Land Trust Act. Deletes a requirement
that a land trustee be qualified to act as a fiduciary.
20 Deletes obsolete provisions. Provides for the rights,
liabilities, and duties of land trust beneficiaries.
21 Provides that the principal residence of a beneficiary
which is held in a land trust qualifies for the homestead
22 tax exemption. Provides for appointing successor trustees
and specifies requirements for the declaration of
23 appointment. Provides that a trustee of a land trust may
also be a creditor of such trust or a beneficiary of the
24 trust. Provides for applicability of the act. (See bill
for details.)
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