The Docket: Virginia Court Addresses Need for Corrective Instruments Involving Trusts
The Docket is a monthly TitleNews Online feature provided by ALTA’s Title Counsel Committee which reviews significant court rulings and other legal developments and explains the relevance to the title insurance industry.
Stephen Gregory, of counsel for the law firm Steptoe & Johnson PLLC, provided today’s review of a decision by circuit court in Virginia that addressed the conveyance of an easement burdening property that had been conveyed into a trust. Gregory may be reached at firstname.lastname@example.org.
Citation: Janet Kruck v. Mark Krisak, et al., 2018 WL 2386671 (May 23, 2018) Circuit Court of Fairfax County, Virginia; Bernhard, J.
Facts: The dates are crucial to this case which concerned the conveyance of an easement burdening property that had been conveyed into an inter vivos trust. Austin Foster granted an easement to his sister, Janet Kruck, for the use of a septic/drain field on his property. That easement was dated 9/30/74, but wasn’t recorded until 6/13/06. On 4/15/06, Austin Foster conveyed the servient tenement to himself as trustee of the Austin Foster Revocable Living Trust. The deed into the trust was recorded 6/21/06. In the interim, Mr. Foster individually granted an amendment to the easement (providing access to the septic/drain field) on 6/9/06, which was recorded with the earlier easement on 6/13/06. The Foster property eventually became owned by defendants Krisak, who contested the right of plaintiff to the use of the second easement. The following chart was embedded into the decision:
Conveyance of parcel to Trust
Fee simple title conveyance to Edward and LeeAnn Foster
Foreclosure conveyance to current owners/Defendants
Holding: The parties stipulated that Mr. Foster’s sister was an innocent purchaser for value without notice of the transfer into the trust prior to the grant of the easement. The defendants maintained, however, that the bona fide purchaser protections only extended to persons who acquired ownership interests in land and an easement was not such an ownership interest. Therefore, the defendants argued, because the property was in the trust and not owned by Foster individually, the second easement was void. The court agreed with the defendants’ point of law on bona fide purchasers and easements but held that the grant of the easement by Foster after he had transferred the servient tenement into the trust of which he was the sole beneficiary operated as a partial revocation of the trust to the extent of the easement. Therefore, the court held the easement was valid and binding on successors in interest of the servient tenement.
Relevance to the Title Industry: Title examiners have long been attentive to the ramifications of trust property. Industry practice has been to call for corrective instruments if an individual conveys or encumbers property that the person had previously transferred into his or her trust. Kruck tells us that may not be necessary. The opinion contains a detailed analysis of when and how a conveyance by an individual may be viewed as a revocation or partial revocation of the trust.