Articles Posted in Real Estate Law

underwood-guide-cloud-on-title-300x300The purpose of this article is to discuss the commonly-discussed, but poorly understood, concepts of a “cloud on title.” A “Cloud on title” is an adverse claim, which may look good on its face, but is actually invalid or barred in some way. A cloud on title is a claim or encumbrance (like a mortgage or lease) resulting in unclear ownership of a property. 

A cloud on title can also be a defect in a deed or lien that discourages future purchasers. Because it is unclear who owns the property, a cloud on title may prevent someone from becoming a future legal owner of a property. Beyond difficulties in selling the property, the cloud on title stays even if the property is transferred to someone else. 

What are some examples of a cloud on title?

underwood-real-estate-commission-probate-300x300Probate proceedings can often be complex, especially when it comes to the sale of property within an estate. In California, the rules governing commissions for agents, brokers, and auctioneers involved in probate sales are outlined in California Probate Code. 

Probate commissions are fees paid to executors and administrators for their services in managing and distributing an estate. However, what constitutes “normal” probate commissions can vary widely and is often misunderstood. 

Probate commissions, also known as executor fees or personal representative fees, compensate individuals responsible for overseeing the probate process. These individuals, typically named in the deceased’s will or appointed by the court if there’s no will, handle tasks such as gathering assets, paying debts, filing tax returns, and distributing property to beneficiaries.

underwood-primer-after-acquired-title-doctrine-300x300When it comes to real estate transactions, ensuring a clean and clear title is essential. However, what happens if a property is sold without a perfect title, only for the seller to acquire the missing rights or interests later? This scenario is where the After Acquired Title Doctrine comes into play. In this blog, we’ll discuss what this doctrine entails, its implications for buyers and sellers, and how it impacts real estate transactions.

What is the “After Acquired Title Doctrine”?

The After Acquired Title Doctrine is a legal principle that addresses situations where a seller transfers property without having complete ownership or rights to the property at the time of sale. 

underwood-guide-marketable-record-title-act-300x300The Marketable Record Title act provides a statutory time limit to eliminate certain liens. Specifically, the purpose is to enhance the marketability of property by fixing an expiration date for certain interests, which are generally ancient mortgages, deeds of trust, unexercised options, powers of termination, unperformed contracts for the sale of real property, dormant mineral intersts, and abandoned easements, while also providing a procedure for allowing the interests to be preserved. In other words, the Act helps to simplify and facilitate real property transactions. In this blog, we’ll delve into what the Marketable Record Title Act entails, its significance, and how it impacts property owners.

What is the Marketable Record Title Act (MRTA)?

The Marketable Record Title Act is a piece of legislation adopted by many states in the United States with the aim of clarifying and simplifying real property titles. Its primary objective is to extinguish certain old and dormant interests in real estate, thereby providing buyers with a more secure and marketable title. (see Robin v. Crowell (2020) 55 Cal.App.5th 727.) 

underwood-co-owner-take-rent-property-300x300Often, the question of distributing rent earned on a co-owned property arises in the context of cotenants. Cotenants have equal rights to possess their property with their fellow cotenants. This means that no one cotenant can exclude another from the property. One cotenant can, however, assign their right of possession to a third party. 

This can happen when a cotenant rents out part of the property to a tenant. In this situation, the other cotenants still have the right to possess the property, but they do not have a right to exclude the tenant. The tenant is also prohibited from excluding the other cotenants from occupying the property. 

How can a cotenant lease property they co-own?

Underwood-Blog-Image-Temp-Apr-24-300x300Probate Code section 859 protects certain individuals whose property or money is taken, concealed, or disposed of by another. Section 859 does this by imposing hefty penalties on anyone who wrongfully takes or conceals property belonging to certain groups. 

Specifically, the statute provides:

“If a court finds that a person has in bad faith wrongfully taken, concealed, or disposed of property belonging to a conservatee, a minor, an elder, a dependent adult, a trust, or the estate of a decedent, or has taken, concealed, or disposed of the property by the use of undue influence in bad faith or through the commission of elder or dependent adult financial abuse . . . the person shall be liable for twice the value of the property recovered by an action under this part.” (Prob. Code § 859 (emphasis added).)

underwood-trustees-beneficiaries-300x300A trust is a legal device that is commonly used in estate planning. A trust represents “a collection of assets and liabilities” that can be held and transferred by an individual to another individual, the “beneficiary.” (Portico Mgmt. Grp., LLC v. Harrison (2011) 202 Cal.App.4th 464, 473.) When the trustee, the person responsible for managing and distributing the trust’s assets, has a personal interest in those assets, certain problems can arise. This is because the trustee is bound by several legal duties designed to safeguard the interests of the beneficiaries. Therefore, if a trustee is also a beneficiary, they must make sure that they do not unduly favor themselves at the expense of the other beneficiaries. 

What is a trustee?

A person who creates a trust, the “settlor,” names a “trustee” who holds legal title to the property held in the trust for the benefit of one or more persons, the “beneficiaries.” (Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 521.) The settlor can create a voluntary or express trust through a formal agreement where the settlor details his intentions regarding the trustee and beneficiaries. A property owner can designate himself as a trustee, creating an express trust holding his property. (Probate Code § 15200(a).) The owner can also designate a third party as a trustee. A trust can be created during the settlor’s life, or, it can be created by a will where it becomes effective upon the settlor’s death.  

underwood-jogani-v-jogani-joint-ownership-300x300Recently, a jury in the Los Angeles Superior Court awarded what may become one of the largest judgments in a real estate case that has ever been issued. Significantly, in addition to a damage award in the billions, the Court also found that the family members were also co-owners in 17,000 apartments across California. As a result, this consequential decision should be better understood for its potential implications for all co-ownership situations. 

Background

This saga started in the late 1970s. The Jogani family, natives of Gujarat, India, built a fortune in the global diamond trade with offices in Europe, Africa, the Middle East, and North America. 

underwood-restraint-on-alienation-300x300Real estate law has many nuances and subtleties. One of the lesser known aspects to real estate law is something known as a “restraint on alienation.” At its most basic, a restraint on alienation limits the sale or transfer of interests in real property. 

Civil Code Section 711 states that “[c]onditions restraining alienation, when repugnant to the interest created, are void.” These conditions may be found in a will that conveys property but provides that the property may not be sold for a certain period of time. (Wharton v. Mollinet (1951) 103 Cal.App.2d 710, 713.) A restriction on the sale of the property will be deemed void and not apply to the recipient’s property interest. Similarly, if property is transferred by a deed, such a restriction will be deemed invalid. The purpose underlying Section 711 is to “clarify[] and protect[] titles for the benefit of the public at large, as well as of the grantees.” (Id.) 

What restraints, if any, are permissible?

underwood-testimony-property-value-partition-cases-300x300The estimated value of a piece of property can be important for resolving several types of legal disputes. It is crucial when a property owner needs to establish damages when the government interferes with the owner’s property and diminishes its value. Spouses may wish to testify regarding the value of their marital property when it is divided during divorce proceedings. A property owner may also want to testify as to their property’s value to contest a bank’s foreclosure on the property.

Testimony regarding a property’s estimated value can also be important during partition proceedings: when one or more co-owners of a property want to sell their property interest a question arises under the Partition of Real Property Act as to the Property’s value. As such, determining who can answer that question becomes of critical importance.

Normally, who can testify as to a property’s value?

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