Bulletin: MD2015002

Dear Associates:

MD Real Property §7–105(b)(2) specifies that the power of sale in a deed of trust ("DOT") may be exercised only by an "individual", a term that is further defined in §7–105(a) to mean a "natural person". In other words, only human beings may be named as trustees in a DOT. Corporations, LLC’s, and other businesses should not be named as trustees.

MD Real Property §7–105(b)(3) states that the trustee need not be named in the DOT. §7–105(b)(4) notes that errors or omissions in the DOT concerning the designation of the trustee do not invalidate the ability of the mortgagee to appoint an individual at a later time to exercise the power of sale. However, there should be a provision in the DOT permitting the appointment of a substitute trustee under these circumstances.

There is no requirement that a trustee be a Maryland resident. Typically, however, trustees are Maryland foreclosure attorneys who are selected by the lender to conduct the foreclosure, should one become necessary.

You should not name a Stewart Title employee as a DOT trustee. In the event of litigation regarding the DOT, the trustee may be named as a necessary party to the proceedings. This could involve Stewart Title in a costly and unnecessary lawsuit.

Practice tips:

• DOT foreclosures that are not conducted by an individual are invalid under Maryland law.
• Check carefully when you are conducting any closing to verify that the DOT names an individual as a trustee. If not, please contact a Maryland underwriter.
• When reviewing a completed DOT foreclosure, make sure an individual conducted the sale. If not, please contact a Maryland underwriter.
• Do not name any Stewart Title employee as a DOT trustee.
• Include the following language on any title commitment, which insures a new deed of trust:

The trustee on the deed of trust insured by the policy resulting from this title commitment must be a natural person. Deeds of trust identifying a corporate trustee, or the failure to identify a trustee on a deed of trust, will result in an exception being inserted in the policy for loss or damage resulting therefrom.

Please contact a Maryland Underwriter if you have any questions about this Bulletin.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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