Oklahoma Supreme Court: Transfer Of Property By Trust Fiduciary Exempt From Residential Property Condition Disclosure Act

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In Rickard v. Coulimore, a January 25, 2022 opinion from the Oklahoma Supreme Court, the Court read the plain language of the Residential Property Condition Disclosure Act (RPCDA) to determine that a transfer of real property by a trustee of a revocable trust who never occupied the real property was a transfer by a fiduciary exempt from the RPCDA.

The Facts Of Rickard v. Coulimore

Keely Rickard purchased a residential property from the Coulimore Family Living Trust (the “Trust”).  The Trust was a revocable trust, with Jonathan and Elinor Coulimore being the settlors, trustees, and beneficiaries.  The Coulimores never occupied the property purchased by Rickard.

Rickard purchased the property from the Trust in October 2015.  In January 2016 Rickard sued the Coulimores alleging that they failed to disclose certain defects in the property.  Rickard alleged that she was forced to vacate the property due to issues from previous flooding, water, and drainage damage. The parties filed competing motions for summary judgment.

The Coulimores argued they were entitled to judgment as a matter of law because there was no duty to disclose the alleged defects under the Residential Property Condition Disclosure Act (RPCDA) and because Rickard waived her right to inspect the property and any claims at closing. Rickard argued the transaction was exempt from the RPCDA and, therefore, she could pursue common law remedies.

The trial court found the transaction was exempt from the RPCDA, pursuant to 60 O.S. § 838(A)(3), and granted Rickard’s motion for partial summary judgment as it related to the inapplicability of the RPCDA. The district court certified the order for immediate appeal.

What Is Oklahoma’s Residential Property Condition Disclosure Act ?

The Oklahoma RPCDA provides the sole and exclusive remedy for civil actions for a seller’s failure to disclose to the buyer a defect which was actually known to the seller prior to acceptance of an offer to purchase. See 60 O.S.2011 § 837(A)-(B); White v. Lim2009 OK 79, ¶ 17, 224 P.3d 679, 685.

The RPCDA applies to most residential real property transactions. See 60 O.S.2011 §§ 832-833.

Transfers By a Fiduciary Who Does Not Occupy the Property Are Exempt From the RPCDA

The RPCDA lists several exemptions.

Here, the trial court found the transaction was exempt from the RPCDA pursuant to 60 O.S. § 838(A)(3), which provides:

  1. This act does not apply to:

. . .

  1. Transfers by a fiduciary who is not an owner occupant of the subject property in the course of the administration of a decedent’s estate, guardianship, conservatorship or trust . . . .

60 O.S. § 838(A).

Rickard, the buyer, argued that the transaction was exempt from the Oklahoma RPCDA because the transfer was by a fiduciary (the trustee) who did not occupy the subject property, in the course of the administration of a trust.

The Coulimores argued that the Oklahoma RPCDA applied to the transfer because  (1) the transaction was not a transfer by a fiduciary; (2) the Coulimores, as husband and wife, previously owned the property and, therefore, were “owner occupants” of the subject property; and (3) the transfer was not in the course of the administration of a decedent’s trust.

The Oklahoma Supreme Court analyzed each element to determine whether the RPCDA applied to the transfer by the trustee in this case.

Transfers By a Fiduciary

The Oklahoma Supreme Court first examined the definition of fiduciary to determine if there was a “transfer by a fiduciary”:

It is well understood that a trustee is a fiduciary. Similarly, executors, administrators, guardians, and conservators are all fiduciaries. The plain and ordinary meaning of “transfer by a fiduciary,” as used in 60 O.S. § 838(A)(3), includes a transfer by a trustee who is not an owner occupant of the subject property in the course of the administration of a trust. There is no indication in the statutory language that the Legislature intended for the exemption to apply when the trustee and the beneficiary are different but not when the trustee and beneficiary are the same. We hold the exemption may apply when the trustee and the beneficiary are the same person.

The Oklahoma Supreme Court also rejected the argument that the exemption does not apply because the trust was revocable, and a fiduciary relationship had not yet been created between the successor trustee and the remaining beneficiaries:

The statutory language is “trust.” The Legislature did not distinguish between revocable and irrevocable trusts in 60 O.S. § 838(A)(3). Without such specificity, we understand this to mean all trusts. We presume the Legislature expressed its intent and intended what it expressed–and nothing more. See Thurston v. State Farm Mut. Auto. Ins. Co.2020 OK 105, ¶ 16, 478 P.3d 415, 420; McCarter v. State ex rel. Pitman1921 OK 149, ¶¶ 2-3, 198 P. 303, 305.

Therefore, the sale of the Oklahoma Property from the Trust to Rickard was a transfer by a fiduciary within the meaning of 60 O.S. § 838(A)(3).

Who Is Not an Owner Occupant Of the Subject Property

The Coulimores next argument was that they previously owned the subject property in their individual capacities and that, therefore, the exemption cannot apply.

The statute states that: “This act does not apply to . . . transfers by a fiduciary who is not an owner occupant of the subject property . . .” 60 O.S. § 838(A)(3) (emphasis added). The Coulimores reasoned that, because they were in the chain of title, they were “owners” and their prior ownership alone prevents the exemption from applying.  The Oklahoma Supreme Court was not persuaded by the argument:

The Coulimores’ suggested reading of the statute completely ignores the word “occupant.” …The plain and ordinary meaning of “owner occupant,” as used in 60 O.S. § 838(A)(3) is an owner who occupies the subject property. “Owner occupant” does not mean either an owner or an occupant of the subject property. The owner and seller in this case is a trust. A trust cannot occupy property. But if the trustee of the trust is a natural person, the trustee may occupy the property.

The Oklahoma Supreme Court made a clear holding:

We hold that if a trust owns the subject property and the trustee is not an occupant of the subject property, the “not an owner occupant of the subject property” element of the exemption is satisfied.

The Coulimore Trust owned the subject property. The Coulimores are natural persons and the trustees of the Coulimore Trust. The Coulimores never occupied the subject property. Therefore, the Coulimores were fiduciaries who were not owner occupants of the subject property within the meaning of 60 O.S. § 838(A)(3).

In the Course Of the Administration Of a Decedent’s Estate, Guardianship, Conservatorship Or Trust

The Coulimores next argue that because they were living at the time of the transaction, the exemption does not apply. The statute provides:

This act does not apply to:

. . .

Transfers by a fiduciary who is not an owner occupant of the subject property in the course of the administration of a decedent’s estate, guardianship, conservatorship or trust . . . .

60 O.S. § 838(A).

The Coulimores argued “decedent’s” modifies each noun that follows: decedent’s estate, decedent’s guardianship, decedent’s conservatorship, decedent’s trust. The Coulimores insisted there must be a decedent to trigger the exemption, and they are still living. Furthermore, the Coulimores argued “administration of a trust” implies the death of the settlor.

Again, the Oklahoma Supreme Court was not persuaded by the strained interpretation placed on the statutory language:

The plain and ordinary meaning of the words and sentence structure is that “decedent’s” attaches to “estate” only. A decedent is not always necessary to administer a trust. Many trusts are administered in whole or in part during the lifetime of the settlors. Similarly, guardianships and conservatorships originate with a living ward.

The subject property was owned by the Coulimore Trust. The Coulimores were acting as trustees of the Coulimore Trust when they sold the subject property to Rickard. The Coulimores have never occupied the property. Therefore, the transaction was a transfer by a fiduciary who is not an owner occupant of the subject property in the course of the administration of a trust and, pursuant to 60 O.S. § 838(A)(3), is exempt from the RPCDA.

Placing a strained and stretched interpretation on statutory language in order to fit your case is usually not successful.  As the Oklahoma Supreme Court made clear in its reading of the RPCDA and application of the statute to the fiduciary trust transaction in this case, it is the plain meaning of words as used in a statute that control.  For more, read Does a Revocable trust Became Irrevocable Once One of the Settlors Passes Away?