The short answer
The trust agreement is the governing instrument of the DST, and under Delaware law it can shape almost everything: who manages, what duties they owe, what you may vote on and how the trust ends. Filed agreements follow a common order: a tax article that bans the actions Rev. Rul. 2004-86 forbids and overrides everything else; trustee and manager articles that give the sponsor's manager exclusive control and narrow its duties; a beneficial interest article that leaves you only a right to distributions; a distribution article; and a termination article with the manager's sale power and a springing entity for emergencies. Read those five, then the indemnity and arbitration clauses.
At a glance
| Tax article | Overrides every other clause and bars sales, reinvestment, refinancing, new leases, major works and new capital |
|---|---|
| Who manages | The sponsor's manager, exclusively; it is usually also the signatory trustee |
| Your rights | Distributions only; no direction, no legal title, no partition, no in-kind demand |
| Owner cap | No more than 1,999 beneficial owners in the filed forms |
| Transfers | Allowed subject to securities law, with the sponsor holding a right of first refusal in one form |
| Distributions | All available cash after fees, expenses and reserves, monthly or quarterly |
| Endgame | Manager sells at its discretion or moves the property into a springing LP or LLC |
| Disputes | One form sends them to binding arbitration before an arbitrator the signatory trustee selects |
The tax article comes first and overrides everything, because it is what makes the interest real estate
In a filed DST trust agreement, Article 3 says it supersedes any inconsistent provision. Once the sponsor issues its conversion notice, no trustee, manager or owner may sell or exchange the real estate except under the termination article, reinvest money other than for permitted repairs, renegotiate or add financing, renegotiate or sign leases except on a tenant's bankruptcy or insolvency, make more than minor non-structural changes unless the law requires them, or accept new capital. That list tracks the limits in Rev. Rul. 2004-86, and the article states the intent that the trust be an investment trust and each owner a grantor treated as owning the real estate directly.
Before the conversion notice the sponsor affiliate is the only owner and holds broad powers, including adding assets, renegotiating loans and leases, and selling; the agreement admits those powers are inconsistent with investment trust status. Investors can be admitted no earlier than three days after the notice. The forbidden list is explained in plain terms at the DST seven deadly sins.
The trustee and manager articles hand control to the sponsor's manager and narrow the duties it owes you
The Delaware trustee accepts legal process, files certificates and acts on the manager's written direction; it has no duty except those stated, and no implied duties are read in. The manager appoints a signatory trustee, and the initial signatory trustee is the manager itself, serving without compensation. The trust's investment activities are managed exclusively by the manager, whose powers after conversion are to be strictly and narrowly construed to protect the tax status. Each role is compared at DST trustee roles.
Delaware's Statutory Trust Act section 3806(c) lets a governing instrument expand, restrict or eliminate fiduciary duties, but not the implied covenant of good faith and fair dealing. The filed form uses that power: the manager's duties are limited to those expressly set out, and it is liable only for willful misconduct, bad faith, fraud or gross negligence. Its fee is in the same article, 1.0% of gross rents a year in this form; another filed form charges an annual fee on the money raised from investors, which the manager may defer.
The beneficial interest article leaves you a right to distributions and very little else
Class 1 owners, the investors, have only the right to receive distributions from operations or sale. They may not direct the trust or the manager, add capital, take part in management, cause loans or leases to be renegotiated, or cause a sale and reinvestment. Owners hold no legal title, have no interest in specific trust property, cannot demand an in-kind distribution, and waive judicial dissolution and partition. Owner death or bankruptcy does not end the trust. The voting picture is at who controls a DST.
Transfers are permitted subject to securities laws, but in this form a sale to an outside buyer first goes to the sponsor affiliate, which has ten business days to match the offer at a price reduced by the broker commission you would have paid. Any transfer that would push the number of owners above 1,999 is void. Delaware section 3805(c) makes the interest personal property, which is why it passes by assignment rather than deed; exits are covered at DST illiquidity and exits.
The distribution article pays out available cash after the sponsor's fees and reserves, and the indemnity can reach you
The manager distributes all available cash quarterly in this form, monthly in the other, after reimbursing the trustee and manager, paying the manager's fee and keeping reserves it decides are needed. Reserves may be invested only in short-term U.S. government obligations or deposits at banks with at least $100,000,000 of capital and surplus, maturing before the next distribution. The manager sends an annual report of rent, expenses, reserves and distributions.
Read the indemnity twice. In the filed form, investors jointly and severally agree to reimburse and indemnify the Delaware trustee and the manager against losses, including for their ordinary negligence but not their willful misconduct, bad faith, fraud or gross negligence. The obligations are stated to be personal, although the manager must use trust income first, which reduces distributions. Ask counsel how that clause reads in the agreement you are signing.
The termination article decides how you get out: a sale at the manager's discretion or a springing entity
The manager may sell at any time it decides a sale is appropriate, using commercially reasonable efforts not to sell within two years unless circumstances change materially, and it determines fair market value. The agreement instructs the manager to let each owner take its share as a 1031 or 721 exchange, and the sale is as is. If the master tenant fails to pay rent or files for bankruptcy, the manager may dissolve the trust and move the property into a newly formed limited partnership; the second form uses a springing LLC and adds the risk of investors losing a substantial part of their investment as a trigger. What that does to your next exchange is at what a springing LLC means for you.
The last clauses matter too. Amendments require a signed writing, and Delaware section 3806(b)(3) permits an instrument to allow amendment without the vote of any particular owner, so check who must sign. Disputes in the first form go to binding arbitration before a sole arbitrator chosen by the signatory trustee, with the loser paying costs and fees. Some agreements add a sponsor option to buy all interests for operating partnership units, covered at 721 UPREIT from a DST.
Related questions
Do I sign the trust agreement itself?
In the filed form you become bound by signing the purchase agreement, and the manager must give you the trust agreement at or before the time you become an owner. Read it before you sign the purchase agreement, not after.
Can the sponsor change the trust agreement after I invest?
Only as the amendment clause allows. Delaware lets an instrument permit amendment without any particular owner's vote, while the tax article still bars changes that would break investment trust status.
Can I ask for my share of the building instead of cash?
Not under the filed forms, which deny any right to an in-kind distribution and waive partition, unlike the facts of Rev. Rul. 2004-86.
Who chooses the arbitrator if I have a dispute?
In one filed form, the signatory trustee, in its sole discretion, and that trustee is the sponsor's manager. Ask whether your offering uses the same clause.
Where are the fees in the trust agreement?
The trustee and manager fees sit in their own articles, but most offering fees are in the memorandum and related agreements. The full list is at DST fees and loads.
Sources
Checked against these publications on September 30, 2026. Rules and figures change; confirm the current version with your CPA or attorney before you act. This page is general information, not tax or legal advice.