By Thomas M. Drinan
In Ohio real property is transferred via a deed. To successfully convey property from a seller to a buyer there are a number of formal requirements. Arguably, the most important requirement is the participation of two or more parties, a grantor and a grantee. Both must be either a person or entity legally existing at the time of the conveyance. A deed to or from a person or entity not currently in existence would therefore be void under Ohio law.
A trust is the equitable right to the benefit of property, ownership of which rests in another. The key word in this definition is the word “equitable.” As a trust confers an equitable right, it is generally not considered to be a legal entity and therefore arguably unable to hold title to real property using the above rationale. Therefore, a deed to “The John Doe Trust” may have no legal effect whatsoever, because the trust itself has no separate legal existence. So, if you cannot deed property to the trust itself, to whom can you deed it? As mentioned above, ownership of property held in trust rests in the name of another, a trustee. Generally, a trustee is a person or an entity that has the power to buy and sell property held in a trust. Since the trustee is a real person or entity in existence, he/she or it would be the proper party in whom real property should be conveyed to.
However, if you are not so knowledgeable legally, or if you mistakenly deeded your property to the trust name and not to the trustee, you are in luck. In 2012 the Ohio Revised Code was updated to provide an out for you. ORC Section 5301.071, paraphrased, states that no deed shall be considered defective because the grantor or grantee of the instrument is a trust rather than the trustee of the trust. There are two simple prerequisites for this savings statute to apply: first, the trust must have been duly created at the time of the conveyance and, second, a memorandum of trust, with a legal description of the property, must be recorded in the county where the deed was recorded.
I would still argue that deeding property to a trustee is the proper way to transfer property held in trust in Ohio, but if you happen to make a mistake you can always rely on the savings statute when explaining to a title company why you deeded your property to the trust itself and not to the trustee.