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Agreement for Sale and Purchase, Trustees

The simple math of transacting with trustees

1 does not equal 2.

A trust is not a legal entity.  The trustees of a trust are the “legal” face of the trust.  When there is more than one trustee, generally all of the trustees must be party to the agreement.  These are fundamental propositions of trust law.

That means that if the trustees of a trust enter into an agreement to sell a property, unless there is a valid delegation, all of the trustees must sign the agreement for sale and purchase. 

But how does the agent or purchaser or the lawyers acting know that all the trustees have signed the agreement?  A title search will show who the registered proprietors are.  Title searches, normally carried out by the agent selling a property and the solicitor acting on the sale / purchase if a recent search is not provided, are not expensive (expect to pay around $30).

None of this is rocket science.  And yet here I am saying it again.  Why?  Again a purchaser has entered into a contract that was not signed by all of the trustee owners.  The consequence?  The putative purchaser in the case Dong v Sun was unable to prevent a subsequent sale consented to by both trustees.

Harsh?  To the uninitiated perhaps.  However, there were solicitors acting.  The title had been searched indicating who the owners were.  As noted by Faire J (editor’s emphasis):

 “[54] It is unfortunate that neither solicitor for the plaintiff, nor the first defendant expressly considered whether the document of 16 December 2012 had been signed by both registered proprietors. At least the plaintiffs’ solicitor was aware of the fact that June was a registered proprietor. He had obtained a search.

[55] Where a co-owner signs a contract document, the presumption or presumed intention is that the signature is conditional upon the signature of the co-owner.”

 

A disappointing outcome for the purchaser.  Disappointment was not going to be avoided given the circumstances of the case – we none of us like to not get what we want.  However, some simple up front math could have nipped this matter in the bud.  How many proprietors? 2.  How many vendors signed the contract? 1.  While there could have been a valid reason for this (eg a permitted delegation), if no-one challenges the apparent inconsistencies in the agreement, it cannot be presumed that everything will be OK just because we want it to be.

References:

  • Dong v Sun [2014] NZHC 208
  • Martinez v Rowland [1983] 1 QdR 496

 

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