Trustee Qualifications for a Deed of Trust in Alaska

By Teo Spengler

The term trustee is used in the law to describe very different roles. The qualifications of a trustee can be crucially important or much less important depending upon what kind of trustee is at issue. While trustees who manage express trusts can wield enormous power over trust assets, the trustee for a deed of trust is little more than a dual agent for parties involved in the purchase of real estate. Alaska imposes few restrictions on who can assume this role.

Trust Deed

A deed of trust is a security agreement used in some states, including Alaska, as an alternative to a mortgage. A deed of trust is an agreement between three parties: a borrower, lender and trustee. The lender forwards money to the borrower for the purpose of purchasing real estate. The borrower purchases real property with the money and transfers title to the property to a neutral third party, called a trustee. The trustee's only duties arise at the end of the transaction when he must transfer the title back to the borrower if the debt is paid in full or sell the property to repay the lender if the borrower defaults on his loan.

Distinctions

The chief difference between a deed of trust arrangement and mortgage is the question of who holds title to the property. In a mortgage, the lender retains factual ownership of the real property and only relinquishes it to the borrower when the loan is paid in full. In a deed of trust such as those used in Alaska, the trustee holds title to the property; either the borrower or lender will have a claim to the title in the future depending upon whether the borrower pays off or defaults on the loan.

Ready to start your LLC? Start an LLC Online Now

Alaska Law

Alaska law does not set out any particular qualifications that an individual or business entity must possess to serve as the trustee in a deed of trust in the state. Traditionally, to serve in the role of a dual or common agent, the trustee may not have close ties to or be affiliated with either the lender or the borrower. Even this requirement of neutrality is not specified in Alaska statutes, but may be assumed by courts based on the nature of the trustee's dual agency role. Many deed of trust trustees in Alaska are banks, title companies or attorneys.

Bond

Before a trustee can sell real property subject to a deed of trust, Alaska law requires him to obtain a bond in the amount of $100,000 to protect the parties against any fraud or negligence on his part. Alaska Statute § 34.20.125, which sets out the bonding requirement, specifically excepts trustees who are attorneys licensed to practice in Alaska as well as trustees that are state agencies.

Substituting Trustees

In Alaska, the lender can replace a trustee at will without the permission of the borrower. Under Alaska Statute § 34.20.120, the lender may replace the trustee of a real property trust deed simply by recording a signed substitution of trustee. The substitution must include the date the trust deed was executed; names of the lender, borrower and trustee; book and page on which the deed of trust is recorded; name of the new trustee; and an affidavit stating the old trustee was given a copy of the substitution.

Ready to start your LLC? Start an LLC Online Now
What Is the Difference Between Warranty Deed & Trustee Deed?
 

References

Resources

Related articles

Assuming a Mortgage With Power of Attorney

While state laws regarding powers of attorney vary, a power of attorney can allow one person to conduct financial transactions on another person's behalf. This may include the power to buy and sell real estate. The power of attorney may also include the power to assume a mortgage held by another person.

Title Vs. Deed of Trust

The words "title" and "deed of trust" are often used in real estate. If you're buying a home, both these are used -- and they might confuse you. Title is actually a legal concept while a deed of trust is a real estate document. Understanding these terms can help you navigate the buying process.

How to Create a Legal Trust

A trust is a legal instrument that is useful for tax and estate planning. Under a trust arrangement, a trustee manages assets you transfer to the trust for the benefit of beneficiaries you select. You retain only indirect control over trust assets – the trustee must dispose of the assets as you direct in the trust deed that creates the trust. A trust is fairly simple to create, although it is prudent to have a lawyer look over the trust deed before you sign it.

LLCs, Corporations, Patents, Attorney Help

Related articles

What Is a Power of Attorney for a Trust?

A trust is a legal arrangement in which a grantor allows a trustee to manage the distribution of assets to trust ...

Who Can Act As Trustee in a Texas Deed of Trust?

A deed of trust is a type of trust instrument that transfers interest in real property. In Texas, a deed of trust is ...

Can a DBA Sign a Deed of Trust for a Corporation?

All states permit business owners to use a DBA -- "doing business as" name -- regardless of whether the owner is an ...

Why Does a Power of Attorney Not Transfer to a Trustee?

A power of attorney and a trust document are similar in that they both convey to an individual the authority to manage ...

Browse by category
Ready to Begin? GET STARTED