Senate Bill sb1956c1

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    Florida Senate - 2006                           CS for SB 1956

    By the Committee on Banking and Insurance; and Senator
    Aronberg




    597-2364-06

  1                      A bill to be entitled

  2         An act relating to land trusts; amending s.

  3         689.071, F.S.; providing a short title;

  4         providing definitions; revising provisions

  5         relating to land trust transfers of real

  6         property and vesting of ownership in a trustee;

  7         deleting a requirement that a trustee be

  8         qualified to act as a fiduciary; deleting

  9         obsolete references to "dower" and "curtesy";

10         specifying rights, liabilities, and duties of

11         land trust beneficiaries; providing that the

12         principal residence of a beneficiary which is

13         held in a land trust is entitled to the

14         homestead tax exemption under certain

15         circumstances; providing for the appointment of

16         successor trustees; providing requirements for

17         declarations of appointment; providing that a

18         trustee of a land trust may be a creditor of

19         the trust or of a trust beneficiary; amending

20         s. 201.02, F.S.; conforming a cross-reference;

21         providing application; providing an effective

22         date.

23  

24  Be It Enacted by the Legislature of the State of Florida:

25  

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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    Florida Senate - 2006                           CS for SB 1956
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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 for which such trustee serves as

 9  trustee.

10         (c)  "Holder of the power of direction" means any

11  person or entity having the authority to direct the trustee to

12  convey property or interests, execute a mortgage, distribute

13  proceeds of a sale or financing, and execute documents

14  incidental to the administration of a land trust.

15         (d)  "Land trust" is not the creation of an entity, but

16  means any express written agreement or arrangement by which a

17  use, confidence, or trust is declared of any land, or of any

18  charge upon land, for the use or benefit of any beneficiary,

19  under which the title to real property, both legal and

20  equitable, is held by a trustee, subject only to the execution

21  of the trust, which may be enforced by the beneficiaries.

22         (e)  "Trustee" means the person or entity designated in

23  a trust instrument to hold legal and equitable title to

24  property of a land trust.

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 any,

31  corporation, bank, trust company, or other entity duly formed

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    Florida Senate - 2006                           CS for SB 1956
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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  in such property 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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    Florida Senate - 2006                           CS for SB 1956
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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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    Florida Senate - 2006                           CS for SB 1956
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 1         (a)  Except as provided in this section, the

 2  beneficiaries of a land trust are not liable, solely by being

 3  a beneficiary, under a judgment, decree, or order of court or

 4  in any other manner for a debt, obligation, or liability of

 5  the land trust.

 6         (b)  Any beneficiary acting under the trust agreement

 7  of a land trust is not liable to the land trust's 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)  A 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 in

21  which 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. Parties dealing with the trustee are not required

25  to inquire into the terms of the unrecorded trust agreement.

26         (f)  An unrecorded trust agreement giving rise to a

27  recorded instrument for a land trust may provide that one or

28  more persons or entities have the power to direct the trustee

29  to convey property or interests, execute a mortgage,

30  distribute proceeds of a sale or financing, and execute

31  documents incidental to administration of the land trust. The

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    Florida Senate - 2006                           CS for SB 1956
    597-2364-06




 1  power of direction, unless provided otherwise in the land

 2  trust agreement, is conferred upon the holders of the power

 3  for the use and benefit of all holders of any beneficial

 4  interest in the land trust. In the absence of a provision in

 5  the land trust agreement to the contrary, the power of

 6  direction shall be in accordance with the percentage of

 7  individual ownership. In exercising the power of direction,

 8  the holders of the power of direction are presumed to act in a

 9  fiduciary capacity for the benefit of all holders of any

10  beneficial interest in the trust, unless otherwise provided in

11  the land trust agreement. A beneficial interest is

12  indefeasible, and the power of direction may not be exercised

13  so as to alter, amend, revoke, terminate, defeat, or otherwise

14  affect or change the enjoyment 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 recorded deed of

20  conveyance on a trustee to sell, lease, encumber, or otherwise

21  dispose of property described in the deed is effective, and a

22  person dealing with the trustee is not required to inquire any

23  further into the right of the trustee to act or the

24  disposition of any proceeds.

25         (h)  The principal residence of a beneficiary shall be

26  entitled to the homestead tax exemption even if the homestead

27  is held by a trustee in a land trust, provided the beneficiary

28  qualifies for the homestead exemption under chapter 196.

29         (9)  SUCCESSOR TRUSTEE.--

30  

31  

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    Florida Senate - 2006                           CS for SB 1956
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 1         (a)  The provisions of s. 737.309 relating to the

 2  resignation of a trustee do not apply to the appointment of a

 3  successor trustee under this section.

 4         (b)  If the recorded instrument and the unrecorded land

 5  trust agreement are silent as to the appointment of a

 6  successor trustee in the event of the death, incapacity,

 7  resignation, or termination due to dissolution of a land

 8  trustee or if a land trustee is unable to serve as trustee,

 9  one or more persons or entities having the power of direction

10  of the land trust agreement may appoint a successor trustee or

11  trustees of the land trust by filing a declaration of

12  appointment of a successor trustee or trustees in the office

13  of the recorder of deeds in the county in which the trust

14  property is located. The declaration must be signed by a

15  beneficiary or beneficiaries of the trust and by each

16  successor trustee, must be acknowledged in the manner provided

17  for acknowledgment of deeds, and must contain:

18         1.  The legal description of the trust property.

19         2.  The name and address of the former trustee.

20         3.  The name and address of each successor trustee.

21         4.  A statement that each successor trustee has been

22  appointed by one or more persons or entities having the power

23  of direction of the land trust, together with an acceptance of

24  appointment by each successor trustee.

25         (c)  If the recorded instrument is silent as to the

26  appointment of a successor trustee or trustees but an

27  unrecorded land trust agreement provides for the appointment

28  of a successor trustee or trustees in the event of the death,

29  incapacity, resignation, or termination due to dissolution of

30  the land trustee, upon the appointment of any successor

31  trustee pursuant to the terms of the unrecorded land trust

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    Florida Senate - 2006                           CS for SB 1956
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 1  agreement, each successor trustee shall file a declaration of

 2  appointment of a successor trustee in the office of the

 3  recorder of deeds in the county in which the trust property is

 4  located. The declaration must be signed by both the former

 5  trustee and each successor trustee, must be acknowledged in

 6  the manner provided for acknowledgment of deeds, and must

 7  contain:

 8         1.  The legal description of the trust property.

 9         2.  The name and address of the former trustee.

10         3.  The name and address of the successor trustee.

11         4.  A statement of resignation by the former trustee

12  and a statement of acceptance of appointment by each successor

13  trustee.

14         5.  A statement that each successor trustee was duly

15  appointed under the terms of the unrecorded land trust

16  agreement.

17  

18  If the appointment of any successor trustee is due to the

19  death or incapacity of the former trustee, the declaration

20  need not be signed by the former trustee and a copy of the

21  death certificate or a statement that the former trustee is

22  incapacitated or unable to serve must be attached to or

23  included in the declaration, as applicable.

24         (d)  If the recorded instrument provides for the

25  appointment of any successor trustee and any successor trustee

26  is appointed in accordance with the recorded instrument, no

27  additional declarations of appointment of any successor

28  trustee are required under this section.

29         (e)  Each successor land trustee appointed is fully

30  vested with all the estate, properties, rights, powers,

31  trusts, duties, and obligations of the predecessor land

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    Florida Senate - 2006                           CS for SB 1956
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 1  trustee, except that any successor land trustee is not under

 2  any duty to inquire into the acts or omissions of a

 3  predecessor trustee and is not liable for any act or failure

 4  to act of a predecessor trustee. A person dealing with any

 5  successor trustee pursuant to a declaration filed under this

 6  section is not obligated to inquire into or ascertain the

 7  authority of the successor trustee to act within or exercise

 8  the powers granted under the recorded instruments or any

 9  unrecorded declarations or agreements.

10         (f)  A land trust agreement may provide that the

11  trustee, when directed to do so by the beneficiaries of the

12  land trust or legal representatives of the beneficiaries, may

13  convey the trust property directly to another trustee on

14  behalf of the beneficiaries or others named by the

15  beneficiaries.

16         (10)  TRUSTEE AS CREDITOR.--

17         (a)  If a debt is secured by a security interest in a

18  beneficial interest in a land trust or by a mortgage on land

19  trust property, the validity or enforceability of the debt,

20  security interest, or mortgage and the rights, remedies,

21  powers, and duties of the creditor with respect to the debt or

22  the security are not affected by the fact that the creditor

23  and the trustee are the same person or entity, and the

24  creditor may extend credit, obtain any necessary security

25  interest or mortgage, and acquire and deal with the property

26  comprising the security as though the creditor were not the

27  trustee.

28         (b)  A trustee of a land trust does not breach a

29  fiduciary duty to the beneficiaries, and it is not evidence of

30  a breach of any fiduciary duty owed by the trustee to the

31  beneficiaries for a trustee to be or become a secured or

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 1  unsecured creditor of the land trust, the beneficiary of the

 2  land trust, or a third party whose debt to such creditor is

 3  guaranteed by a beneficiary of the land trust.

 4         (11)(6)  REMEDIAL ACT.--This act is remedial in nature

 5  and shall be given a liberal interpretation to effectuate the

 6  intent and purposes hereinabove expressed.

 7         (12)(7)  EXCLUSION.--This act does not apply to any

 8  deed, mortgage, or other instrument to which s. 689.07

 9  applies.

10         Section 2.  Subsection (4) of section 201.02, Florida

11  Statutes, is amended to read:

12         201.02  Tax on deeds and other instruments relating to

13  real property or interests in real property.--

14         (4)  The tax imposed by subsection (1) shall also be

15  payable upon documents which convey or transfer, pursuant to

16  s. 689.071, any beneficial interest in lands, tenements, or

17  other real property, or any interest therein, even though such

18  interest may be designated as personal property,

19  notwithstanding the provisions of s. 689.071(6)(4). The tax

20  shall be paid upon execution of any such document.

21         Section 3.  This act is intended to clarify existing

22  law and applies to all land trusts whether created before, on,

23  or after October 1, 2006.

24         Section 4.  This act shall take effect October 1, 2006.

25  

26          STATEMENT OF SUBSTANTIAL CHANGES CONTAINED IN
                       COMMITTEE SUBSTITUTE FOR
27                         Senate Bill 1956

28                                 

29  1.   Requires that the beneficiary of a land trust qualify for
         a homestead exemption under ch. 196, F.S., in order for
30       property held in a land trust to qualify for a homestead
         exemption.
31  
    2.   Requires a land trust to be a written agreement.
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