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Craig
Warner Properties Inc
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Can a trustee be sued
Wednesday, December 03 2008 11:38 AM
I recall hearing that a trustee can not be sued (Bill Gatten if I recall correctly). But recently I was told a trustee can be sued. Though fore it is smart to make the trustee a corporation to create layers for protection and the beneficiary shouldn't be affiliated with the corporation.
Would someone clarify this?
Craig Warner
Warner Properties Inc.
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Randy Hughes
Master Advisor-39 years of experience
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Re:Can a trustee be sued
Wednesday, December 03 2008 04:57 PM
Craig,
I recall hearing that a trustee can not be sued (Bill Gatten if I recall correctly). But recently I was told a trustee can be sued. Though fore it is smart to make the trustee a corporation to create layers for protection and the beneficiary shouldn't be affiliated with the corporation.
YES, A TRUSTEE CAN BE SUED BUT UNLESS HE/SHE/IT HAS COMMITTED FRAUD...WILL BE DEFAULTED OUT OF ANY CASE INVOLVING THE TRUST PROPERTY OR THE BENEFICIARY.
Randy Hughes
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Bill G
investor
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Re:Re:Can a trustee be sued
Tuesday, February 17 2009 06:15 PM
Yes a trustee can indeed be sued and may have to spend thousands of dollars to extricate themselves (and the beneficiaries) from the litigation. My statement is that a bona fide trustee cannot be "SUCCESSFULLY" sued (if prevailing law means anything at all). It is therefore highly important that with multi-beneficiary land trusts only a qualified professional trustee (licensed and bonded, not for profit 501C corporation) be used. We use Equity Holdings Corporation of Midpines, California.
The only suits we have seen against the trustee has been in instances where investors (always against our advice) have attempted foreclosure bailouts that went sour. The tact of the mooches (defaulting party's) attorney is to sue everyone with a name and try to force a settlement out of court by falsely and maliciously asserting violation of mortgage lending guidelines, forcing us to declare and prove that the land trust is legitimately a land trust and not a mortgage, corporation or partnership. They invariably claim violations of truth in lending: HOEPA TILA, RESPA, RICO, unconscionableness, equity stripping, forced forfeiture, etc.. We always win (and beat the prosecuting attorney out of his hoped-for thousands), but that has not always curtailed some serious expense on our parts (yet another reason to have a solid, bona fide trustee behind you).
How many suits like this so far? About 15 in all...each one involving folks who though they were shooting sitting ducks by using outside investors' money to bail people out of foreclosure and then equity-sharing with them: a practice we strongly eschew when not done properly (i.e., there is a proper and safe way to avoid the pitfalls while legitimately assisting people in foreclosure).
Bill Gatten
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