Q: Can we put a family trust as the landlord’s name on a lease? We don’t want to volunteer our personal information on the lease, just give the name of the family trust. And would this prevent us from being sued?
A: Placing a rental property in a family trust can offer many benefits. Among them are the avoidance of probate, estate planning, and control of how and to whom the property should be distributed after the owner’s death. However, nothing prevents an aggrieved tenant from suing the trust.
You are concerned about anonymity, but even if rent is sent to a P.O. Box, the family trust needs to have a designated authorized agent of the trust. You’ll need a physical address where tenants can contact you to serve the entity with legal process or notices. The tenant must be notified about the acceptable methods of rent payment (personal check, cash, money order, etc.), as well as the phone number of the individual who is the authorized agent of the trust.
Normally, this is the trustee of the trust, but it can be another individual if you don’t want to be bothered. A simple analogy is when Donald Trump owns a property. Can the tenant call him directly? His phone number is likely not listed on the lease, but someone else’s number is.
Another question we fielded is in light of a new law that goes into effect July 1, 2024, limiting security deposits to one month’s rent. Landlords who have no more than two or fewer residential properties, with collectively no more than four units offered for rental, are exempt from the security deposit limits imposed by AB 12.
Would an otherwise exempt landlord maintain its exemption status if the ownership is in a family trust? We respond in the affirmative.