North Dakota Land Trust Agreement (Title-Holding Trust)

NORTH DAKOTA LAND TRUST AGREEMENT

(Title-Holding Trust Under North Dakota Uniform Trust Code, N.D.C.C. chapters 59-09 through 59-19)

TABLE OF CONTENTS

1. Establishment, Parties, and Trust Property
2. Definitions
3. Nature of Trustee's Estate and Beneficial Interest
4. Trustee Powers, Duties, and Limitations
5. Direction by Beneficiary
6. Beneficial Interest as Personal Property
7. Assignment of Beneficial Interest
8. Successor Beneficiaries
9. Successor Trustees
10. Compensation, Indemnification, and Liability
11. Term and Termination; Rule Against Perpetuities
12. Tax Provisions
13. General Provisions and Governing Law
14. Execution

ARTICLE I. ESTABLISHMENT, PARTIES, AND TRUST PROPERTY

1.1 Caption and Parties

1.2 Trust Name

This trust shall be known as the "[TRUST NAME] Land Trust, dated [__/__/____]" (the "Trust"). Title shall be taken in the name "[TRUSTEE NAME], as Trustee under Trust Agreement dated [__/__/____], known as the [TRUST NAME] Land Trust, and not personally."

1.3 Recitals

• A. The Settlor desires to convey legal title to the Real Estate described in Section 1.4 to the Trustee, to be held by the Trustee pursuant to the North Dakota Uniform Trust Code, N.D.C.C. chapters 59-09 through 59-19, and the terms of this Agreement.
• B. The Settlor intends that the Beneficiary's interest in the Trust shall constitute personal property, exercisable only by written direction to the Trustee as expressly provided herein.
• C. The Trustee has agreed to accept the trusteeship and to administer the Trust on the limited, ministerial terms set forth herein.

1.4 Initial Trust Property — Legal Description

The Trustee acknowledges receipt of the following real estate located in [COUNTY] County, North Dakota (the "Real Estate"):

Common Address: [STREET ADDRESS, CITY, NORTH DAKOTA, ZIP]

Tax Parcel No.: [____________________]

Legal Description:

[INSERT FULL METES-AND-BOUNDS OR LOT/BLOCK/SUBDIVISION LEGAL DESCRIPTION EXACTLY AS IT APPEARS ON THE DEED IN TRUST. ATTACH AS EXHIBIT B IF LENGTHY.]

Title is conveyed by Deed in Trust of even date herewith, recorded or to be recorded in the Office of the Recorder of [COUNTY] County, North Dakota, Document/Instrument No. [____________________].

1.5 Additional Property

Additional real or personal property may be added to the Trust by the Settlor, the Beneficiary, or a third party with the Trustee's acceptance. Each addition shall be evidenced by an amendment to Exhibit B.

ARTICLE II. DEFINITIONS

• "Agreement" means this Land Trust Agreement, with all schedules, exhibits, and amendments.
• "Beneficial Interest" means the entire interest of the Beneficiary, including all rights of management, possession, use, income, proceeds, and disposition of the Real Estate exercised through written direction. It is personal property under Section 6.1.
• "Beneficiary" means the person(s) listed on Exhibit A and any successor or assignee.
• "Direction Holder" means the person(s) authorized to direct the Trustee under Article V. If no separate Direction Holder is named, the Beneficiary is the Direction Holder.
• "NDUTC" means the North Dakota Uniform Trust Code, N.D.C.C. chapters 59-09 through 59-19, as amended.
• "Real Estate" means the real property described in Section 1.4 and any additions accepted by the Trustee.

ARTICLE III. NATURE OF TRUSTEE'S ESTATE AND BENEFICIAL INTEREST

3.1 Legal Title in Trustee

The Trustee shall hold full legal title to the Real Estate. Record title shall stand in the Trustee's fiduciary name. No person dealing with the Trustee shall be required to inquire into the existence, validity, or scope of any direction or into the application of proceeds, in accordance with N.D.C.C. § 59-18-12.

3.2 Beneficial Interest Is Personal Property

The interest of the Beneficiary in the Trust and the Real Estate is and shall be personal property for all purposes under North Dakota law to the maximum extent permitted, including succession, marital characterization, and creditor's rights. The Beneficiary has no legal or equitable estate in the Real Estate as real estate; the sole rights are in the earnings, avails, and proceeds and in the right to direct the Trustee.

3.3 No Partition

No Beneficiary, successor, assignee, judgment creditor, or claimant shall be entitled to partition of the Real Estate or to compel in-kind distribution. Rights of distribution are limited to proceeds in money or in kind only upon termination as provided herein.

ARTICLE IV. TRUSTEE POWERS, DUTIES, AND LIMITATIONS

4.1 Direction-Only Trustee

The Trustee shall have no duty or power to manage, control, deal with, or dispose of the Real Estate except upon the written direction of the Beneficiary or Direction Holder. The Trustee shall not be required to investigate or take any action with respect to the Real Estate absent such direction. These limitations are imposed by the express terms of the trust under N.D.C.C. § 59-09-05 (effect of terms of trust on default rules).

4.2 Specific Powers Upon Direction

Upon written direction, the Trustee may (cf. N.D.C.C. §§ 59-16-15 and 59-16-16):

• ☐ Sell, exchange, convey, or transfer the Real Estate (or any portion or interest);
• ☐ Mortgage, pledge, or otherwise encumber the Real Estate;
• ☐ Lease the Real Estate for any term;
• ☐ Grant easements, licenses, rights-of-way, and restrictive covenants;
• ☐ Subdivide, plat, partition, or dedicate the Real Estate;
• ☐ Borrow money, execute notes, and grant security interests;
• ☐ Receive, hold, invest, and distribute proceeds as directed;
• ☐ Execute deeds, releases, satisfactions, and other instruments necessary;
• ☐ Defend, prosecute, compromise, or settle title claims (subject to Section 4.5).

4.3 No Management Duty

The Trustee has no duty to (a) manage, operate, repair, maintain, or insure the Real Estate; (b) collect rents, profits, or proceeds absent direction; (c) pay taxes, assessments, utilities, insurance premiums, or HOA charges; (d) investigate or remediate any environmental or hazardous-material condition; or (e) monitor any law, ordinance, lease, or contract. The Beneficiary directly bears all such obligations and shall indemnify the Trustee under Section 10.3.

4.4 Protection of Third Parties

Pursuant to N.D.C.C. § 59-18-12, third parties dealing with the Trustee in good faith and for value, without knowledge of any breach, are fully protected and not required to inquire into the application of proceeds. The Trustee may furnish a Certification of Trust under N.D.C.C. § 59-18-13 in lieu of furnishing this Agreement.

4.5 No Personal Liability of Trustee

The Trustee shall not be personally liable on any contract, lease, mortgage, note, or obligation of the Trust. Every instrument shall recite that it is executed by the Trustee solely in fiduciary capacity and not personally. No recourse shall lie against the Trustee individually for any obligation arising out of or relating to the Real Estate (cf. N.D.C.C. § 59-18-10 — limitation on personal liability of trustee).

4.6 Limited Standard of Care

The Trustee's duties under N.D.C.C. §§ 59-16-01 (duty to administer) and 59-16-02 (duty of loyalty) are, by the express terms of this Trust under N.D.C.C. § 59-09-05, limited to (i) executing the direction function, (ii) maintaining records, and (iii) holding and conveying legal title. The Trustee owes no duty to evaluate the prudence of any direction given by the Beneficiary or Direction Holder, except to refuse direction that would constitute a serious breach of trust on the face of the direction.

ARTICLE V. DIRECTION BY BENEFICIARY

5.1 Direction Procedure

All directions shall be:

• ☐ In writing, signed by the Beneficiary or Direction Holder;
• ☐ Delivered to the Trustee at the address in Section 1.1;
• ☐ Sufficiently specific to identify the action directed; and
• ☐ Accompanied by all required documents and funds.

The Trustee may rely on any direction reasonably believed to be genuine.

5.2 Multiple Beneficiaries

If more than one Beneficiary, directions must be signed by holders of at least [majority/all/_____ percent] of the Beneficial Interest. The Trustee may follow majority direction, await unanimity, or petition the District Court for instructions under N.D.C.C. ch. 59-10.

5.3 Designation of Direction Holder

The Beneficiary may designate or remove a Direction Holder by signed written instrument delivered to the Trustee. The Direction Holder is the Beneficiary's agent and is not a fiduciary to the Beneficiary unless separately undertaken.

5.4 Trustee's Refusal to Act

The Trustee may refuse to act on direction that:

• a. Appears unlawful, fraudulent, or a serious breach of trust;
• b. Would expose the Trustee to personal liability not adequately indemnified;
• c. Requires the Trustee to take possession of, operate, or manage the Real Estate;
• d. Lacks accompanying funds or required documentation; or
• e. Conflicts with a prior, unrevoked direction.

The Trustee may petition the District Court for instructions under N.D.C.C. ch. 59-10.

ARTICLE VI. BENEFICIAL INTEREST AS PERSONAL PROPERTY

6.1 Characterization

The Beneficial Interest is personal property for all purposes under North Dakota law to the maximum extent permitted, including succession, marital characterization, and creditor's rights.

6.2 No Real Estate Rights

No Beneficiary holds (a) any legal or equitable estate in the Real Estate, (b) any right to a deed, conveyance, or partition, or (c) any right of possession except through direction.

6.3 Creditor Limitations

The Beneficial Interest is subject to creditor claims as personal property, subject to:

• a. Any spendthrift provision in Section 6.4;
• b. N.D.C.C. § 59-13-02 (spendthrift provision); and
• c. N.D.C.C. § 59-13-03 (exceptions notwithstanding spendthrift — child/spousal support, judgment creditors providing services to protect the Beneficial Interest, and governmental claims).

6.4 Optional Spendthrift Provision

☐ Spendthrift provision applies: Pursuant to N.D.C.C. § 59-13-02, no Beneficiary shall have power to assign, anticipate, encumber, or otherwise transfer the Beneficial Interest, voluntarily or involuntarily, and the Beneficial Interest shall not be subject to claims of creditors, except as provided in N.D.C.C. § 59-13-03.

☐ No spendthrift provision; Beneficial Interest is freely assignable.

ARTICLE VII. ASSIGNMENT OF BENEFICIAL INTEREST

7.1 Method

Subject to Article VI, the Beneficial Interest (or any fractional share) may be assigned by written assignment, substantially in the form of Exhibit C, signed by the assignor and lodged with the Trustee.

7.2 Trustee Acceptance

The Trustee may decline an assignment that (a) is not in proper form, (b) violates a spendthrift provision, (c) would result in beneficial ownership by a sanctioned person, or (d) lacks required certifications (W-9, OFAC).

7.3 Effect

Upon acceptance, the assignee is substituted as Beneficiary for the assigned portion, and the Trustee shall amend Exhibit A.

ARTICLE VIII. SUCCESSOR BENEFICIARIES

8.1 Designation

Upon a Beneficiary's death, the Beneficial Interest shall pass to the Successor Beneficiary(ies) designated on Exhibit A without probate, upon delivery to the Trustee of:

• ☐ Certified death certificate;
• ☐ Successor's affidavit and identification; and
• ☐ Tax-identification documentation.

8.2 Multiple Successors

Multiple Successor Beneficiaries hold shares specified on Exhibit A, or equal shares if unspecified.

8.3 Failure of Designation

If no Successor designated is then living, the Beneficial Interest passes to the deceased Beneficiary's estate.

8.4 Revocation/Modification

A Beneficiary may revoke or modify the Successor designation by written instrument signed and lodged with the Trustee. The most recent lodged designation controls.

ARTICLE IX. SUCCESSOR TRUSTEES

9.1 Resignation

The Trustee may resign upon thirty (30) days' written notice and a final accounting (cf. N.D.C.C. § 59-15-05).

9.2 Removal

Holders of at least [majority/all] of the Beneficial Interest may remove the Trustee for cause or without cause, subject to payment of accrued fees and expenses (cf. N.D.C.C. § 59-15-06).

9.3 Appointment of Successor

A Successor Trustee shall be appointed:

• a. By the Beneficiary (holders of a majority); or
• b. If unfilled within sixty (60) days, by the District Court on petition under N.D.C.C. ch. 59-10 and § 59-15-04.

9.4 Conveyance to Successor

The predecessor Trustee shall execute and deliver a deed and assignment vesting title and trust property in the Successor Trustee, recorded in the County Recorder's office.

ARTICLE X. COMPENSATION, INDEMNIFICATION, AND LIABILITY

10.1 Trustee Compensation

• ☐ Acceptance fee: $[____________]
• ☐ Annual administration fee: $[____________]
• ☐ Per-transaction fee: $[____________]
• ☐ Hourly rate for extraordinary services: $[____________]
• ☐ Reimbursement of out-of-pocket expenses

(See N.D.C.C. § 59-15-08 — reasonable compensation.)

10.2 Limited Standard of Care

The Trustee's standard of care is limited as provided in Section 4.6.

10.3 Indemnification by Beneficiary

The Beneficiary shall indemnify, defend, and hold harmless the Trustee from all claims, losses, liabilities, damages, judgments, fines, penalties, costs, and expenses (including reasonable attorneys' fees) arising out of or relating to (a) the Real Estate, (b) any direction given, (c) any failure of the Beneficiary to perform any obligation, or (d) any environmental, tort, or contract claim concerning the Real Estate — except to the extent caused by the Trustee's willful misconduct or gross negligence.

10.4 Trustee Lien

The Trustee shall have a first lien on the Real Estate and Beneficial Interest for unpaid compensation, expenses, and indemnification claims, enforceable per N.D.C.C. § 59-15-09.

ARTICLE XI. TERM AND TERMINATION; RULE AGAINST PERPETUITIES

11.1 Maximum Duration

This Trust shall continue until the earliest of:

• a. Direction by the Beneficiary to terminate and convey out;
• b. The stated termination date in Section 11.2; or
• c. The latest date permitted under N.D.C.C. § 47-02-27 (North Dakota statutory rule against perpetuities), i.e., 21 years after the death of the survivor of measuring lives in being at creation (or such later vesting period as North Dakota law permits for nonvested interests in personal property held in trust).

11.2 Stated Termination Date

This Trust shall terminate on [__/__/____], unless previously terminated under Section 11.1.

11.3 Termination Procedure

On termination, the Trustee shall:

• a. Convey the Real Estate to the Beneficiary (or as directed) by recordable deed;
• b. Distribute remaining trust property to the Beneficiary;
• c. Reserve for unpaid trustee compensation, expenses, indemnification, and known liabilities; and
• d. Render a final accounting under N.D.C.C. § 59-16-13.

11.4 No Direction at Termination

If no direction is received within sixty (60) days of the Perpetuities Date or stated termination date, the Trustee may convey the Real Estate to the Beneficiary in kind or petition the District Court for instructions under N.D.C.C. ch. 59-10.

ARTICLE XII. TAX PROVISIONS

12.1 Grantor Trust Status

For federal and North Dakota income tax purposes, this Trust is intended to be treated as a [grantor trust as to the Settlor/grantor trust as to the Beneficiary/non-grantor trust].

12.2 Real Estate Taxes

The Beneficiary shall pay all ad valorem real estate taxes, special assessments, and special improvement district levies. The Trustee shall forward tax bills but shall not pay them absent direction and funds.

12.3 Transfer/Recording

The Beneficiary shall be responsible for any North Dakota recording fees on the deed in trust, deeds out of trust, and assignments. (Note: North Dakota does not impose a state real estate transfer tax, but recording fees apply.)

12.4 TIN

The Trustee shall use [Settlor's TIN / Trust EIN / Beneficiary's TIN] as appropriate for federal and state reporting.

ARTICLE XIII. GENERAL PROVISIONS AND GOVERNING LAW

13.1 Governing Law

Governed by and construed under the laws of the State of North Dakota, including the North Dakota Uniform Trust Code (N.D.C.C. chapters 59-09 through 59-19), without regard to conflicts-of-law principles. The parties select North Dakota as the principal place of administration (cf. N.D.C.C. § 59-09-08).

13.2 Exclusive Jurisdiction

Exclusive jurisdiction over disputes lies in the District Court of [____________________] County, [_____ Judicial District], North Dakota, in accordance with N.D.C.C. § 27-05-06 and chapter 59-10.

13.3 Severability

Invalid provisions shall be reformed to the minimum extent necessary; the remainder continues in effect.

13.4 Amendment

Amendment requires written instrument signed by the Settlor (if living and competent), the Trustee, and all Beneficiaries. After Settlor's death/incapacity, by Trustee and all Beneficiaries.

13.5 Counterparts; Electronic Signatures

May be executed in counterparts. Electronic signatures permitted under the North Dakota Uniform Electronic Transactions Act (N.D.C.C. ch. 9-16); however, the Deed in Trust and any deed out require original signature and notarial acknowledgment for recording.

13.6 Notices

In writing, delivered by hand, certified mail, or overnight courier to addresses in Section 1.1.

13.7 Headings

For convenience only; not interpretive.

13.8 Entire Agreement

This Agreement with its Schedules and Exhibits constitutes the entire agreement regarding the Trust.

EXECUTION

IN WITNESS WHEREOF, the parties have executed this North Dakota Land Trust Agreement as of the date first written above.

Settlor

Trustee (Accepting Trusteeship)

Initial Beneficiary

NOTARIAL ACKNOWLEDGMENT (Settlor)

STATE OF NORTH DAKOTA )
) SS:
COUNTY OF [____________________] )

On this _____ day of __________________, 20____, before me personally appeared [SETTLOR FULL LEGAL NAME], known to me (or satisfactorily proven) to be the person whose name is subscribed to the foregoing instrument, and acknowledged the execution thereof as their free and voluntary act.

_____________________________________
Notary Public, State of North Dakota

Printed Name: ________________________
My Commission Expires: [__/__/____]

[SEAL]

NOTARIAL ACKNOWLEDGMENT (Trustee)

STATE OF NORTH DAKOTA )
) SS:
COUNTY OF [____________________] )

On this _____ day of __________________, 20____, before me personally appeared [TRUSTEE FULL LEGAL NAME], who acknowledged the execution of the foregoing in fiduciary capacity as Trustee.

_____________________________________
Notary Public, State of North Dakota

Printed Name: ________________________
My Commission Expires: [__/__/____]

[SEAL]

NOTARIAL ACKNOWLEDGMENT (Beneficiary)

STATE OF NORTH DAKOTA )
) SS:
COUNTY OF [____________________] )

On this _____ day of __________________, 20____, before me personally appeared [BENEFICIARY FULL LEGAL NAME], who acknowledged the execution of the foregoing as their free and voluntary act.

_____________________________________
Notary Public, State of North Dakota

Printed Name: ________________________
My Commission Expires: [__/__/____]

[SEAL]

EXHIBIT A — BENEFICIAL INTEREST SCHEDULE

(Beneficial Interest is personal property under Section 6.1)

Beneficiary Signature(s):

_____________________________________ Date: [__/__/____]

_____________________________________ Date: [__/__/____]

EXHIBIT B — TRUST PROPERTY SCHEDULE

Full legal descriptions in Schedule B-1.

EXHIBIT C — FORM OF ASSIGNMENT OF BENEFICIAL INTEREST

ASSIGNMENT OF BENEFICIAL INTEREST

For valuable consideration, the receipt of which is acknowledged, [ASSIGNOR NAME] ("Assignor") assigns, transfers, and sets over to [ASSIGNEE NAME] ("Assignee") an undivided [____]% beneficial interest in the [TRUST NAME] Land Trust under Trust Agreement dated [__/__/____], together with all rights, powers, and privileges appurtenant thereto.

The Assignor warrants that (a) Assignor owns the assigned Beneficial Interest, (b) the interest is free of liens (except as disclosed), and (c) no spendthrift or other restriction prohibits this assignment.

Effective on execution and Trustee acceptance.

SOURCES AND REFERENCES

• North Dakota Uniform Trust Code (NDUTC), N.D.C.C. chapters 59-09 through 59-19, including:
• § 59-09-05 (terms of trust prevail over default rules)
• § 59-09-08 (principal place of administration)
• § 59-10 (judicial proceedings)
• § 59-12-01 (methods of creating trust)
• § 59-12-02 (requirements for creation)
• § 59-13-02 (spendthrift provision)
• § 59-13-03 (spendthrift exceptions)
• § 59-15-04 to § 59-15-09 (office of trustee — appointment, resignation, removal, compensation, lien)
• § 59-16-01 (duty to administer)
• § 59-16-02 (duty of loyalty)
• § 59-16-13 (accounting)
• § 59-16-15, 59-16-16 (powers of trustee)
• § 59-18-10 (limitation on personal liability of trustee)
• § 59-18-12 (protection of third parties)
• § 59-18-13 (certification of trust)
• N.D.C.C. § 47-02-27 (statutory rule against perpetuities)
• N.D.C.C. ch. 47-10 (conveyances)
• N.D.C.C. ch. 47-19 (recording)
• N.D.C.C. ch. 9-16 (electronic transactions)
• N.D.C.C. § 27-05-06 (District Court jurisdiction)
• Historical note: former N.D.C.C. ch. 59-02 ("Trusts for the Benefit of Third Persons") was repealed in 2007 by S.L. 2007, ch. 549, § 27, on adoption of the NDUTC.
• North Dakota Legislative Branch — current Century Code: https://ndlegis.gov/general-information/north-dakota-century-code/