Thursday, May 17, 2012

Mississippi substituting trustees prior to March 15, 2007 are vulnerable to be declared void

The bill passed both houses of the legislature and became effective after being signed by Governor Barbour on March 15. Not only are representative capacity substitutions permitted, but appointments of trustees ab initio are also allowed, helping to overcome the problem of a trustee inadvertently omitted from the deed of trust. This bill also resolves the concerns of some as to whether or not a trustee must be a natural person, as opposed to a corporation, limited liability company, or other legal entity.

Although this new law will greatly expedite and simplify the document execution process, it is not retroactive. Any substitutions of trustee executed under a power of attorney prior to March 15, 2007 (unless authorized by the deed of trust) will remain invalid, subject to a 10-year statute of limitations. Further, it remains necessary that the substitution of trustee be actually recorded or spread-at-large on the records prior to the first publication of the notice of sale (Miss. Code Ann. Section 89-5-45). Also, a copy of the power of attorney must be recorded on the land records prior to execution of the substitution of trustee by the attorney-in-fact. [Miss. Code Ann. Section 87-3-3; Kountouris v. Varvaris, 476 So.2d 599 (Miss. 1985)].

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