In Florida, land trusts are a creature of statute rather than case law. In 1963, the Florida legislature passed Florida Statutes Section 689.071 which created the Florida Land Trust. In 2006, Section 689.071 was substantially amended. Although the amended act was intended to clarify and codify existing law, it did add provisions not previously in the statute and deleted obsolete provisions (such as references to " dower and courtesy" ). Among the highlights of the revised act' s provisions, it:
1) Deleted the requirement that the trustee be qualified to act as a fiduciary under Florida law;
2) Expanded on the rights, liabilities and duties of land trust beneficiaries;
3) Confirms that the principal residence of a beneficiary which is held in a land trust qualifies for homestead tax exemption;
4) Provides a method for appointing successor trustees without the requirement of any court order, as was the case under the prior act unless a successor was named in the recorded deed; and
5) Provides that a trustee of a land trust may also be a creditor or a beneficiary of the trust.
A copy of the revised statute is attached to these materials as Exhibit I. A copy of the legislative bill, highlighting revisions to the prior act together with the Florida House of Representative' s analysis of the new act, is attached as Exhibit J.
1. Florida Statutes Section 689.071 recognizes and confirms the creation and establishment of land trusts described in the act.
2. Courts have held that the statutory land trust is not an ordinary inter vivos trust which is administered under the trust administration chapter, Chapter 737, Florida Statutes. See Taylor v. Richmond's New Approach Association, Inc., 351 So.2d 1094 (Fla. 2d DCA 1977).
3. Case law in Florida confirms that a grantee from a land trustee need not look beyond the trustee's deed in trust to determine his powers. Gramer v. Roman.
4. The beneficiary retains full power of management of the property under Robinson v. Walker, 63 Ill. App. 2d 204 (1965).
D. Section 689.071, Florida Statutes, provides that the land trustee receives legal and equitable title to the real property.
1. Under Section 689.071 the trustee receives full rights of ownership over the real property described in the deed with full power as granted in the recorded deed to deal with the property when the grantee is designated as "trustee", when the deed does not name the beneficiaries of the trust, and whether or not reference is made in the recorded deed to an unrecorded trust instrument.
a. The deed must be recorded and must give to the trustee full power and authority either to protect, conserve and to sell or to lease, or to encumber or otherwise to manage and dispose of the real property described in the deed.
b. The trustee can only deal with the property within the power and authority granted in the recorded deed.
2. Section 689.071(4) states that any grantee from a trustee holding title to real property in trust under a recorded trust deed which meets the requirements of 689.071, does not have to inquire into the identification or status of any named or unnamed beneficiary, their heirs or assigns or to the authority of the trustee to act within the powers granted in the recorded deed, nor is there any requirement that the grantee inquire into the provisions of an unrecorded trust document whether such document is referenced in the deed or not.
a. The deed prepared pursuant to Section 689.071 creates a valid trust and there is no need to inquire into any unrecorded trust instruments which may or may not be referenced in the deed. (See Section 689.071(4).)
b. Care should be taken to insure that beneficiaries are not inadvertently named, either in the deed or subsequently recorded documents. By naming beneficiaries on the public record, notice may be given to a title examiner requiring further investigation as to the ownership of the property.
3. Section 689.071(5) provides that all persons dealing with the trustee under any recorded instrument which has been prepared in accordance with the section takes free and clear of the claims of all named or unnamed beneficiaries of the trust and of any unrecorded declarations or agreements collateral to the trust, whether they are referred to in the agreement or not. This subsection further provides that anyone claiming under the beneficiaries does not have a claim against the grantee if all of the provisions of this section have been met.
a. It should be noted, however, that the beneficiary can enforce the terms of the unrecorded trust instrument against the trustee.
b. If the grantee is dealing directly with the beneficiary, this subsection may not apply.
4. Florida Statutes Section 689.071(1) was amended in 2002 so as to permit corporations " or other entit(ies)" to act as trustees under a land trust agreement. The revisions to the act passed in 2006 provides that a trustee can be any " entity duly formed under the laws of its state of qualification," thus expressly recognizing the ability to utilize an out-of-state entity as a trustee and also eliminates the requirement under the prior act that such entity be " qualified to act as fiduciary in this state."
5. Florida Statutes Section 689.071(6) states that in all cases where the recorded instrument prepared in accordance with the section contains a provision declaring the interest of the beneficiary to be personal property only, that provision shall be controlling for all purposes where such determination shall become an issue under the laws or in the courts of the State of Florida. It is important to note that this provision makes it possible for a beneficiary to convey his interest in the real property by assignment of beneficial interest rather than by the execution and recording of a deed.