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Types of Subdivision Trusts

In Arizona, we have two basic subdivision trusts that are known as:

Real Estate Holding Trusts, and
Subdivision Trusts

The real estate holding trust is limited to an agreement where the trustee holds title to the property, but all active managerial and administrative powers are maintained by the beneficiary (the land owner). The trustee's only duty is to deal with the trust and as directed by the beneficiary in accordance with the Agreement terms, and to convey the property, or cause it to be sold, when the trust terminates. Example: the land owner wishes to subdivide and sell unimproved property to individuals who in turn will improve the lots, or the land owner builds homes to sell to individuals.

Subdivision Trusts are limited to an agreement between the first beneficiary (land owner) and second beneficiary (developer) where the trustee holds title to the property. Generally, all active managerial and administrative powers are maintained by the second beneficiary. Again, the trustees only duty is to deal with the trust as directed by the beneficiaries and in accordance with the Agreement terms, and to convey the property, or cause it to be sold, when the trust terminates. Example: the land owner sells the unimproved property to a developer who subdivides the land, improves it (builds homes, cabins, etc.), and sells the lots to end users.


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