By Kim A. Young

The trust document contains a section called “Powers of the Trustee.”

This section is where the person making the trust enumerates what the trustees are allowed to do with the property, for example:

  • Power to sell property
  • Power to mortgage property
  • Power to exchange or trade property.

The trust document may also contain restrictions or directions as to the allocation of certain property, for example:

  • Family beachfront property cannot be sold
  • Farmland is to be distributed to a certain beneficiary
  • Rental property is to be sold and the proceeds divided among to all beneficiaries.

I use these examples to show how the body of a trust determines the sources and uses of trust owned property.

Guam law has two short sections dealing with trust property that are not common in other jurisdictions and which can severely restrict the ability of a trust to deal with its real estate.

Section 29168, Title 21, Chapter 29 of the Guam Code Annotated (paraphrased) states that if a Deed transferring title of property INTO a trust contains the words “with power of sale”, the trustee has the power to sell the property.

Section 29169, Title 21, Chapter 29 of the Guam Code Annotated (paraphrased) states that if a Deed transferring title of property INTO a trust DOES NOT contains the words “with power of sale”, the trustee has NO power to sell the property.

Simply put, when an owner deeds their property into their trust, if that document does not contain the four words “with power of sale,” the trust cannot sell the property. If the attorney drafting trust documents misses this small and unique to Guam detail, a trust cannot sell or otherwise transfer their property.

To further fine tune it:

  • The actual TRUST grants all the powers and authority to the Trustees.
  • The DEED transferring the property ownership into the Trust will take that power away if those four words are not included in the conveyance.

The remedy for the missing “with power of sale” language is to seek an order from a court granting the authority of the trust to sell, lease or mortgage their property. This sort of court involvement is costly both financially to the property owner and is, in my opinion a waste of judicial resources.

Trusts have become a very commonplace tool for everyday people to manage their property. In the past few years, the real estate industry in Guam has seen countless people forced to seek judicial approval to sell or deal with their property because of the lack of the words “with power of sale” included in the deed transferring title to their property.  

Vice Speaker Tina Rose Muna Barnes and Sen. James Moylan have agreed to address this issue and have introduced Bill 36-93, an Act to Repeal Sections 29168 and 29169.

So far, they have the support of the title insurance underwriters servicing Guam, the Legislative review committee of the Guam Association of Realtors and various members of the Guam Bankers Association (although formal endorsements have not yet been requested).  Currently the bill is with Speaker Therese M. Terlaje for review and to set for public hearing. mbj

 

— Kim Anderson Young is president of Security Title. She can be reached at [email protected].