It is not uncommon for property to be owned in the name of the trust as part of an estate planning agenda. In construction, improvements are made all the time to real property owned in the name of a trust or later transferred to a trust for estate planning purposes.
In a recent case, the question became that if the property is owned by the trust does only the trust have standing to file the lawsuit. In this case, homeowners, in their individual capacities, sued a flooring contractor for defective work; however, prior to the lawsuit, the homeowners deeded the home (which would include the flooring in the home) to a revocable trust. The plaintiffs, though, were the trustees of the revocable trust and the settlors of the trust.
When it comes to standing and whether the party has the right to initiate the lawsuit as a real party in interest:
“Standing is a legal concept that requires a would-be litigant to demonstrate that he or she reasonably expects to be affected by the outcome of the proceedings, either directly or indirectly.” “Generally, one has standing to sue when he or she has a sufficient interest at stake in the controversy which will be affected by the outcome of the litigation.” Standing also requires “that the claim be brought by or on behalf of one who is recognized in the law as a ‘real party in interest.’ ”
Shirberg v. Florida Flooring, Inc., 51 Fla.L.Weekly D75a (Fla. 4th DCA 2026) (internal citations omitted).
At the trial level, the trial court granted the flooring contractor’s motion for summary judgment that the homeowners did not have standing to file the lawsuit because they deeded the property to the trust prior to the lawsuit. Thus, there was never standing to initiate the lawsuit.
The appellate court reversed because there was standing. In fact, there were two bases to support standing here.
First, the homeowners were the trustees of the revocable trust and had standing as the trustees and “were not required to specifically allege that they were suing in their capacity as the trustees.” Shirberg, supra.
“Florida law has long recognized that it is generally the trustee, and not a beneficiary, who is the real party in interest with authority to bring an action on behalf of the trust.”
Every action may be prosecuted in the name of the real party in interest, but a . . . trustee of an express trust . . . may sue in that person’s own name without joining the party for whose benefit the action is brought. All persons having an interest in the subject of the action and in obtaining the relief demanded may join as plaintiffs and any person may be made a defendant who has or claims an interest adverse to the plaintiff. Any person may at any time be made a party if that person’s presence is necessary or proper to a complete determination of the cause.
Shirberg, supra (internal citations omitted).
Second, the homeowners were the settlors of the trust, and because the trust was revocable, they had standing in that capacity absent language in the trust document itself:
In addition to expressly evidencing that the plaintiffs were the trustees of the Trust that held the property, the warranty deed evidences that the plaintiffs were the Trust’s settlors, and the Trust was revocable. Contrary to the trial court’s conclusion, a revocable trust’s settlors are the sole beneficiaries during their lifetimes:
A revocable trust is a unique type of transfer . . . . Since [the settlor] is the sole beneficiary of the trust during [the settlor’s] lifetime, [the settlor] has the absolute right to call the trust to an end and distribute the trust property in any way [the settlor] wishes.
Although it is conceivable that trust language could override this legal principle, at a minimum, here, the warranty deed evidences that, as the Trust’s settlors, the plaintiffs were also effectively the Trust’s sole beneficiaries for their lifetimes, and status as sole beneficiaries is another avenue for standing.
Shirberg, supra (internal citations omitted).
Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.