In Focus Point Properties, LLC v. Johnson, the Court of Appeals recently held that when an individual signs a real estate contract as a trustee on behalf of a trust, that individual is not personally liable for breaching the contract.
In this case, the listing agreement expressly stated that the parties to the listing agreement were the “owner and broker,” and although the trustee signed her own name in the signature block, the name of the trust was printed above, showing that the trustee was only signing in her representative capacity. The Court of Appeals said that the trustee was not obligated to personally pay the commission.
Therefore, if a contract is solely between the real estate agent and the trust, and if the trustee signs on behalf of the trust and not individually, the trustee is not liable for the listing commission.
Takeaway: a real estate agent should try to get a personal guarantee from the trustee when listing a property owned by a trust.