Don’t sell property to, nor buy property from, a trust – until, that is, you have written proof that the person representing the trust is properly authorised to do so.
The reason is that all land sale agreements must by law be in writing and signed by both parties i.e. the buyer and seller themselves, “or by their agents acting on their written authority”. And, as a recent High Court judgment has confirmed:
- A trustee of a trust is not an agent of that trust, and his/her power to bind the trust is dependent upon the authority of the co-trustees
- Any agreement signed by an unauthorised trustee is void and therefore unenforceable
- The trust cannot subsequently ratify the agreement. Because it is void ab initio (i.e. from the outset) and therefore never had any legal validity, there is nothing to be ratified.
The loser in that particular case was the seller of a farm, whose attempt to force a family trust to take transfer failed, despite the fact that the trust had taken occupation and complied with the terms of sale agreement (including payment of the purchase price).
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