HB 7099

CS

CHAMBER ACTION

1	The Finance & Tax Committee recommends the following:
2
3	Council/Committee Substitute
4	Remove the entire bill and insert:
5	A bill to be entitled
6	An act relating to land trusts; amending s. 689.071, F.S.;
7	providing a short title; providing definitions; revising
8	provisions relating to land trust transfers of real
9	property and vesting of ownership in a trustee; deleting a
10	requirement that a trustee be qualified to act as a
11	fiduciary; deleting obsolete references to "dower" and
12	"curtesy"; specifying rights, liabilities, and duties of
13	land trust beneficiaries; providing that the principal
14	residence of a beneficiary which is held in a land trust
15	is entitled to the homestead tax exemption under certain
16	circumstances; providing for the appointment of successor
17	trustees; providing requirements for declarations of
18	appointment; providing that a trustee of a land trust may
19	be a creditor of the trust or of a trust beneficiary;
20	amending s. 201.02, F.S.; conforming a cross-reference;
21	providing application; providing an effective date.
22
23	Be It Enacted by the Legislature of the State of Florida:
24
25	Section 1.  Section 689.071, Florida Statutes, is amended
26	to read:
27	689.071  Florida Land Trust Act trusts transferring
28	interests in real estate; ownership vests in trustee.--
29	(1)  SHORT TITLE.--This section may be cited as the
30	"Florida Land Trust Act."
31	(2)  DEFINITIONS.--As used in this section, the term:
32	(a)  "Beneficial interest" means any interest, vested or
33	contingent and regardless of how small or minimal such interest
34	may be, in a land trust which is held by a beneficiary.
35	(b)  "Beneficiary" means any person or entity having a
36	beneficial interest in a land trust. A trustee may be a
37	beneficiary of the land trust for which such trustee serves as
38	trustee.
39	(c)  "Holder of the power of direction" means any person or
40	entity having the authority to direct the trustee to convey
41	property or interests, execute a mortgage, distribute proceeds
42	of a sale or financing, and execute documents incidental to the
43	administration of a land trust.
44	(d)  "Land trust" is not the creation of an entity, but
45	means any express written agreement or arrangement by which a
46	use, confidence, or trust is declared of any land, or of any
47	charge upon land, for the use or benefit of any beneficiary,
48	under which the title to real property, both legal and
49	equitable, is held by a trustee, subject only to the execution
50	of the trust, which may be enforced by the beneficiaries.
51	(e)  "Trustee" means the person or entity designated in a
52	trust instrument to hold legal and equitable title to property
53	of a land trust.
54	(3)(1)  OWNERSHIP VESTS IN TRUSTEE.--Every conveyance,
55	deed, mortgage, lease assignment, or other instrument heretofore
56	or hereafter made, hereinafter referred to as "the recorded
57	instrument," transferring any interest in real property in this
58	state, including, but not limited to, a leasehold or mortgagee
59	interest, to any person or any, corporation, bank, trust
60	company, or other entity duly formed under the laws of its state
61	of qualification qualified to act as a fiduciary in this state,
62	in which recorded instrument the person, corporation, bank,
63	trust company, or other entity is designated "trustee," or "as
64	trustee," without therein naming the beneficiaries of such
65	trust, whether or not reference is made in the recorded
66	instrument to any separate collateral unrecorded declarations or
67	agreements, is effective to vest, and is hereby declared to have
68	vested, in such trustee full rights of ownership over the real
69	property or interest therein, with full power and authority as
70	granted and provided in the recorded instrument to deal in and
71	with the property or interest therein or any part thereof;
72	provided, the recorded instrument confers on the trustee the
73	power and authority either to protect, conserve and to sell, or
74	to lease, or to encumber, or otherwise to manage and dispose of
75	the real property described in the recorded instrument.
76	(4)(2)  NO DUTY TO INQUIRE.--Any grantee, mortgagee,
77	lessee, transferee, assignee, or person obtaining satisfactions
78	or releases or otherwise in any way dealing with the trustee
79	with respect to the real property or any interest in such
80	property properties held in trust under the recorded instrument,
81	as hereinabove provided for, is not obligated to inquire into
82	the identification or status of any named or unnamed
83	beneficiaries, or their heirs or assigns to whom a trustee may
84	be accountable under the terms of the recorded instrument, or
85	under any unrecorded separate declarations or agreements
86	collateral to the recorded instrument, whether or not such
87	declarations or agreements are referred to therein; or to
88	inquire into or ascertain the authority of such trustee to act
89	within and exercise the powers granted under the recorded
90	instrument; or to inquire into the adequacy or disposition of
91	any consideration, if any is paid or delivered to such trustee
92	in connection with any interest so acquired from such trustee;
93	or to inquire into any of the provisions of any such unrecorded
94	declarations or agreements.
95	(5)(3)  BENEFICIARY CLAIMS.--All persons dealing with the
96	trustee under the recorded instrument as hereinabove provided
97	take any interest transferred by the trustee thereunder, within
98	the power and authority as granted and provided therein, free
99	and clear of the claims of all the named or unnamed
100	beneficiaries of such trust, and of any unrecorded declarations
101	or agreements collateral thereto whether referred to in the
102	recorded instrument or not, and of anyone claiming by, through,
103	or under such beneficiaries. However, this section does not
104	prevent including, and without limiting the foregoing to, any
105	claim arising out of any dower or curtesy interest of the spouse
106	of any beneficiary thereof; provided, nothing herein contained
107	prevents a beneficiary of any such unrecorded collateral
108	declarations or agreements from enforcing the terms thereof
109	against the trustee.
110	(6)(4)  PERSONAL PROPERTY.--In all cases in which the
111	recorded instrument, as hereinabove provided, contains a
112	provision defining and declaring the interests of beneficiaries
113	thereunder to be personal property only, such provision shall be
114	controlling for all purposes when such determination becomes an
115	issue under the laws or in the courts of this state.
116	(7)(5)  TRUSTEE LIABILITY.--In addition to any other
117	limitation on personal liability existing pursuant to statute or
118	otherwise, the provisions of s. 737.306 apply to the trustee of
119	a land trust created pursuant to this section.
120	(8)  LAND TRUST BENEFICIARIES.--
121	(a)  Except as provided in this section, the beneficiaries
122	of a land trust are not liable, solely by being a beneficiary,
123	under a judgment, decree, or order of court or in any other
124	manner for a debt, obligation, or liability of the land trust.
125	(b)  Any beneficiary acting under the trust agreement of a
126	land trust is not liable to the land trust's trustee or to any
127	other beneficiary for the beneficiary's good faith reliance on
128	the provisions of the trust agreement.
129	(c)  Chapter 679 applies to the perfection of any security
130	interest in a beneficial interest in a land trust. The
131	perfection of a security interest in a beneficial interest in a
132	land trust does not impair or diminish the authority of the
133	trustee under the recorded instrument, and parties dealing with
134	the trustee are not required to inquire into the terms of the
135	unrecorded trust agreement.
136	(d)  A beneficiary's duties and liabilities may be expanded
137	or restricted in a trust agreement or beneficiary agreement.
138	(e)  Any subsequent document appearing of record in which a
139	beneficiary of a trust transfers or encumbers the beneficial
140	interest in the trust does not diminish or impair the authority
141	of the trustee under the terms of the recorded instrument.
142	Parties dealing with the trustee are not required to inquire
143	into the terms of the unrecorded trust agreement.
144	(f)  An unrecorded trust agreement giving rise to a
145	recorded instrument for a land trust may provide that one or
146	more persons or entities have the power to direct the trustee to
147	convey property or interests, execute a mortgage, distribute
148	proceeds of a sale or financing, and execute documents
149	incidental to administration of the land trust. The power of
150	direction, unless provided otherwise in the land trust
151	agreement, is conferred upon the holders of the power for the
152	use and benefit of all holders of any beneficial interest in the
153	land trust. In the absence of a provision in the land trust
154	agreement to the contrary, the power of direction shall be in
155	accordance with the percentage of individual ownership. In
156	exercising the power of direction, the holders of the power of
157	direction are presumed to act in a fiduciary capacity for the
158	benefit of all holders of any beneficial interest in the trust,
159	unless otherwise provided in the land trust agreement. A
160	beneficial interest is indefeasible, and the power of direction
161	may not be exercised so as to alter, amend, revoke, terminate,
162	defeat, or otherwise affect or change the enjoyment of any
163	beneficial interest.
164	(g)  A trust relating to real estate does not fail, and any
165	use relating to real estate may not be defeated, because
166	beneficiaries are not specified by name in the recorded deed of
167	conveyance to the trustee or because duties are not imposed upon
168	the trustee. The power conferred by any recorded deed of
169	conveyance on a trustee to sell, lease, encumber, or otherwise
170	dispose of property described in the deed is effective, and a
171	person dealing with the trustee is not required to inquire any
172	further into the right of the trustee to act or the disposition
173	of any proceeds.
174	(h)  The principal residence of a beneficiary shall be
175	entitled to the homestead tax exemption even if the homestead is
176	held by a trustee in a land trust, provided the beneficiary
177	qualifies for the homestead exemption under chapter 196.
178	(9)  SUCCESSOR TRUSTEE.--
179	(a)  The provisions of s. 737.309 relating to the
180	resignation of a trustee do not apply to the appointment of a
181	successor trustee under this section.
182	(b)  If the recorded instrument and the unrecorded land
183	trust agreement are silent as to the appointment of a successor
184	trustee in the event of the death, incapacity, resignation, or
185	termination due to dissolution of a land trustee or if a land
186	trustee is unable to serve as trustee, one or more persons or
187	entities having the power of direction of the land trust
188	agreement may appoint a successor trustee or trustees of the
189	land trust by filing a declaration of appointment of a successor
190	trustee or trustees in the office of the recorder of deeds in
191	the county in which the trust property is located. The
192	declaration must be signed by a beneficiary or beneficiaries of
193	the trust and by each successor trustee, must be acknowledged in
194	the manner provided for acknowledgment of deeds, and must
195	contain:
196	1.  The legal description of the trust property.
197	2.  The name and address of the former trustee.
198	3.  The name and address of each successor trustee.
199	4.  A statement that each successor trustee has been
200	appointed by one or more persons or entities having the power of
201	direction of the land trust, together with an acceptance of
202	appointment by each successor trustee.
203	(c)  If the recorded instrument is silent as to the
204	appointment of a successor trustee or trustees but an unrecorded
205	land trust agreement provides for the appointment of a successor
206	trustee or trustees in the event of the death, incapacity,
207	resignation, or termination due to dissolution of the land
208	trustee, upon the appointment of any successor trustee pursuant
209	to the terms of the unrecorded land trust agreement, each
210	successor trustee shall file a declaration of appointment of a
211	successor trustee in the office of the recorder of deeds in the
212	county in which the trust property is located. The declaration
213	must be signed by both the former trustee and each successor
214	trustee, must be acknowledged in the manner provided for
215	acknowledgment of deeds, and must contain:
216	1.  The legal description of the trust property.
217	2.  The name and address of the former trustee.
218	3.  The name and address of the successor trustee.
219	4.  A statement of resignation by the former trustee and a
220	statement of acceptance of appointment by each successor
221	trustee.
222	5.  A statement that each successor trustee was duly
223	appointed under the terms of the unrecorded land trust
224	agreement.
225
226	If the appointment of any successor trustee is due to the death
227	or incapacity of the former trustee, the declaration need not be
228	signed by the former trustee and a copy of the death certificate
229	or a statement that the former trustee is incapacitated or
230	unable to serve must be attached to or included in the
231	declaration, as applicable.
232	(d)  If the recorded instrument provides for the
233	appointment of any successor trustee and any successor trustee
234	is appointed in accordance with the recorded instrument, no
235	additional declarations of appointment of any successor trustee
236	are required under this section.
237	(e)  Each successor land trustee appointed is fully vested
238	with all the estate, properties, rights, powers, trusts, duties,
239	and obligations of the predecessor land trustee, except that any
240	successor land trustee is not under any duty to inquire into the
241	acts or omissions of a predecessor trustee and is not liable for
242	any act or failure to act of a predecessor trustee. A person
243	dealing with any successor trustee pursuant to a declaration
244	filed under this section is not obligated to inquire into or
245	ascertain the authority of the successor trustee to act within
246	or exercise the powers granted under the recorded instruments or
247	any unrecorded declarations or agreements.
248	(f)  A land trust agreement may provide that the trustee,
249	when directed to do so by the beneficiaries of the land trust or
250	legal representatives of the beneficiaries, may convey the trust
251	property directly to another trustee on behalf of the
252	beneficiaries or others named by the beneficiaries.
253	(10)  TRUSTEE AS CREDITOR.--
254	(a)  If a debt is secured by a security interest in a
255	beneficial interest in a land trust or by a mortgage on land
256	trust property, the validity or enforceability of the debt,
257	security interest, or mortgage and the rights, remedies, powers,
258	and duties of the creditor with respect to the debt or the
259	security are not affected by the fact that the creditor and the
260	trustee are the same person or entity, and the creditor may
261	extend credit, obtain any necessary security interest or
262	mortgage, and acquire and deal with the property comprising the
263	security as though the creditor were not the trustee.
264	(b)  A trustee of a land trust does not breach a fiduciary
265	duty to the beneficiaries, and it is not evidence of a breach of
266	any fiduciary duty owed by the trustee to the beneficiaries for
267	a trustee to be or become a secured or unsecured creditor of the
268	land trust, the beneficiary of the land trust, or a third party
269	whose debt to such creditor is guaranteed by a beneficiary of
270	the land trust.
271	(11)(6)  REMEDIAL ACT.--This act is remedial in nature and
272	shall be given a liberal interpretation to effectuate the intent
273	and purposes hereinabove expressed.
274	(12)(7)  EXCLUSION.--This act does not apply to any deed,
275	mortgage, or other instrument to which s. 689.07 applies.
276	Section 2.  Subsection (4) of section 201.02, Florida
277	Statutes, is amended to read:
278	201.02  Tax on deeds and other instruments relating to real
279	property or interests in real property.--
280	(4)  The tax imposed by subsection (1) shall also be
281	payable upon documents which convey or transfer, pursuant to s.
282	689.071, any beneficial interest in lands, tenements, or other
283	real property, or any interest therein, even though such
284	interest may be designated as personal property, notwithstanding
285	the provisions of s. 689.071(6)(4). The tax shall be paid upon
286	execution of any such document.
287	Section 3.  This act is intended to clarify existing law
288	and applies to all land trusts whether created before, on, or
289	after October 1, 2006.
290	Section 4.  This act shall take effect October 1, 2006.

CODING: Words stricken are deletions; words underlined are additions.