A trustee plays a specific and important role. A trustee, in relation to Tenants in Common, is an individual or an entity that holds or manages property as its nominal owner for the benefit of one or more beneficiaries, which in this case, can be the tenants in common. The trustee’s role includes:
- Holding Title: In some Tenants in Common arrangements, particularly those involving investment properties or where the tenants want to structure their ownership for estate planning or tax reasons, the legal title to the property may be held in a trust. The trustee holds this title, although the beneficial interest belongs to the tenants.
- Managing the Property: If the co-owners decide to have a trustee manage the property, the trustee’s responsibilities could include collecting rents, paying bills, and handling the maintenance and administration of the property. This is more common in situations where the property is purely an investment and the owners are not occupying the property.
- Fiduciary Responsibility: The trustee must act in the best interests of all beneficiaries (the co-owners) and manage the property according to the terms of the trust agreement, which should align with the co-owners’ collective interests.
- Disposition of Property: Upon a decision by the tenants in common to sell the property or if a tenant wants to sell their share, the trustee may handle the transaction, ensuring that proceeds are correctly distributed according to the ownership interests.
- Succession Issues: In case one of the tenants in common passes away, the trustee may also have responsibilities relating to the decedent’s interest in the property, especially if the interest is held in a trust. This can simplify the transfer of the deceased tenant’s interest in accordance with their estate plan.
It’s worth noting that not all Tenants in Common arrangements will involve a trustee. A trustee is typically involved when the property is placed into a trust for various reasons, such as estate planning or investment purposes. When a trust is not involved, the tenants in common hold the title to the property directly and manage their interests individually or through mutually agreed-upon arrangements.