Understanding the Legality of Listing Foreclosures Under a Trust

In real estate, it's not uncommon for properties, including foreclosures, to be held and sold through trusts. A frequent question that arises when using a trust for such transactions is whether the trust can list the property in the MLS (Multiple Listing Service) for sale. This article explores the legal framework surrounding this practice, particularly in the context of Bright MLS regulations.

Can a Trust List a Foreclosure Property?

The simple answer is yes, a trust can list foreclosure properties in the MLS, provided it complies with Bright MLS's rules and applicable legal requirements. There is no specific regulation that prohibits a trust from acting as the seller in a real estate transaction. Trusts are recognized as legal entities that can enter into agreements, including listing agreements with brokers.

Bright MLS Rules on Listing Foreclosures Under a Trust

According to Bright MLS Rules, any entity, including a trust, can enter into a listing agreement with a broker and list properties as long as the correct documentation is provided. Here’s a key point from Bright MLS’s rules:

• Listing Agreements: Bright MLS requires a valid listing agreement between the seller (in this case, the trust) and the listing broker. Section 1.7.1 of the Bright MLS rules states, “Listings subject to Exclusive Right to Sell Listing Agreements or Exclusive Agency Listing Agreements must be submitted by the Seller-instructed MLS Entry Date (link here). This rule applies to any legal entity, including trusts.

• Foreclosures: Foreclosure properties can be listed under a trust in the same way as other properties. Bright MLS rules support the listing of foreclosures through legal entities like trusts as long as the listing is properly documented, and all relevant disclosures are made in compliance with both MLS and legal requirements.

Trust as the Seller

As long as the trust has entered into a valid listing agreement with a broker, it meets the necessary MLS requirements to list and sell the property. The role of the trust is essentially the same as that of an individual or corporate entity that owns a property. The property can be marketed, shown, and sold in compliance with local real estate laws and MLS guidelines.

Key Takeaways

• No Legal Prohibition: There are no laws or Bright MLS regulations that prevent a trust from listing a foreclosure property.
• Documentation: A valid listing agreement between the trust and a licensed real estate broker must be in place.