In a trust, before lending, the agreement should be reviewed to determine relevant parties and who is authorized to sign. True or False?

• A. True
• B. False
• C. Only the trustee signs
• D. Only the lender signs

Answer: (A)

The main idea here is confirming who has the authority to bind a trust in a loan transaction. When a trust is the borrower, you’re dealing with a separate legal entity governed by a trustee or trustees. Before lending, you must review the trust instrument to identify who is empowered to sign loan documents on behalf of the trust and under what conditions. Some trusts have a single trustee; others have co-trustees with joint signing requirements, or provisions that a majority or all trustees must approve certain actions. There may also be limitations or special powers (for example, a specific “power to borrow” clause) or beneficiary protections that affect signing authority. If you don’t verify who can sign, you risk executing documents with someone who lacks authority, which could jeopardize the loan’s enforceability or create disputes later.

That’s why the statement is true: a thorough review ensures the correct party or parties sign, reflecting the trust’s authority structure and any restrictions. It’s not automatically just the trustee signing, since there can be multiple trustees or other authorized signers, and it’s not the lender signing—signing is for the borrower’s side.