Comparative Title Analysis in Texas, North Dakota and Montana. Co-authored by Katie English and Taylor Lamb
The Title Question
Your title examiner often encounters a conveyance to an individual “as Trustee” with no Trust specified in the instrument. For example, the Mineral Deed conveys all right, title and interest in Blackacre to “Harold Smith, Trustee,” but the Mineral Deed does not identify the trust or disclose the names of the beneficiaries. These unidentified trusts are commonly referred to as “blind trusts,” and not all states treat these the same way.
In Texas an examiner “may presume the authority to convey, transfer or encumber the title to the property.” See Texas Mineral Title Standard 9.20. Thus, in Texas, if “Harold Smith, Trustee” appeared in a subsequent conveyance purporting to convey Blackacre to a third party, the examiner may treat this as an effective conveyance. If “Harold Smith, Trustee” never reappeared in the chain of title, record title of Blackacre would be held by “Harold Smith, Trustee.”
In North Dakota, identifications such as “‘trustee’ . . . without further identification of the beneficiary by name or the nature of the trust, are merely descriptive and the person is deemed to be acting in an individual capacity.” See North Dakota Title Standard 10-06. Thus, unlike in Texas, the Mineral Deed would not convey Blackacre to a blind trust with Harold Smith as Trustee. Instead, “Harold Smith” in his individual capacity would hold Blackacre.
However, because Standard 10-06 applies to both grantees and grantors, if “Harold Smith, Trustee” reappeared to convey Blackacre, the Examiner would be able to credit this second conveyance because the grantor’s “Trustee” title would be viewed as merely surplus. Thus, the result is the same here as it would be in Texas, although through different means.
In Montana any conveyance to an individual as “‘trustee’ . . . must be considered as though . . . the word ‘trustee’, or ‘as trustee’, or any equivalent fiduciary expression had not been used in connection with the grantee’s name.” See MCA 70-21-307. In other words, Montana follows the same approach as North Dakota.
Instruments with identical language can have different meanings, depending on the state. If you are operating in a new state don’t assume the law there is the same as the law you are used to.