California Partition Law Blog

What is a “Title Defect”?

Published on: August 21, 2024 | By Underwood Law Firm, P.C.

underwood-what-is-title-defect-300x300 The purpose of this article is to explain about the legal concept of a title defect. Finding defects in the title of a property is important because it indicates there is a problem with the property’s ownership. Title defects can prevent sale and present additional costs to owners and buyers.

What is a title defect?

Title defects most commonly appear in the “chain of title” when title to property is passed from person to person. This means the title to the land (ownership) is unclear or flawed in the way it was sold or transferred to a current owner. Defects in title can hinder the sale of a home and also who the home can be sold to. This is because if a buyer learns of a defect in the title, he can object to the purchase of the property. (Easton v. Montgomery (1891) 90 Cal. 307, 308; Gates v. McLean (1886) 70 Cal. 42, 49.)

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What is a Trustee Removal Petition (Prob. Code, § 17200(b)(10))?

Published on: August 16, 2024 | By Underwood Law Firm, P.C.

underwood-trustee-removal-petition-300x300 The purpose of this article is to explain what a trustee removal petition is. In a trust the trust is managed by the trustee, who is put in charge by the creator of the trust called the settlor. A trustee removal petition is made by a settlor, co-trustee, or beneficiary of the trust with the goal of removing the trustee. (Prob. Code, § 17200, subd. (b)(10).) Usually, this petition is made by a beneficiary, meaning the person or persons intended to benefit from the trust.

Why would removal of a trustee be necessary?

A trustee is a person or persons intended to manage a trust. The trustee is meant to protect the trust and ensure beneficiaries are informed and included in any disputes arising with or against the trust. (Johnson v. Curley (1927) 83 Cal. App. 627, 630; Alexander v. Title Ins. & Trust Co. (1941) 48 Cal. App. 2d 488, 493–494.)

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What Does “Color of Title” Mean?

Published on: August 9, 2024 | By Underwood Law Firm, P.C.

underwood-law-color-of-title-300x300 The purpose of this article is to explain the term “color of title.” This is an important concept in real property disputes because it means some has apparent title to property based on a written instrument, but that title is actually defective.

What is Required to Show Color of Title?

Color of title gives the appearance that someone holds title to a piece of property. (Thompson v. Dypvik (1985)174 Cal. App. 3d 329, 339.) The possessor of color of title has a written deed or instrument or judicial decree that seems to transfer good title. However, the transfer is somehow defective and is not actually effective in transferring title. (Packard v. Moss (1885) 68 Cal. 123, 126.) Just because a deed is void does not mean the possessor of color of title has no claim to the property. Instead, the color of title provides exactly that. It can allow someone to assert a right to property under a defective instrument as long as they can show they had a good faith belief the instrument was valid. For example, a deed that describes the land and purports to pass title between two people which is ultimately void or voidable, furnishes color of title on which the recipient of the deed can base a claim of adverse possession. (Id. at 130.)

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A Primer on “Arm’s Length Transactions”

Published on: August 2, 2024 | By Underwood Law Firm, P.C.

underwood-primer-arms-length-transactions-300x300 The purpose of this article is to explain “arm’s length transactions” in real estate in California. This concept is important because this type of transaction or sale for property may affect the deed or contract surrounding the transaction. It also affects property taxes and the value of a property at the time of sale.

What does an “arm’s length transaction” mean?

An arm’s length transaction means a transaction between two parties conducted as if the parties are strangers regardless of how closely related or affiliated, they might be. (Black’s Law Dictionary (10th ed 2014)). This is indicates the absence of a conflict of interest. (In re Rexford Properties, LLC (2016) 557 B.R. 788, 797.)

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What is the ownership presumption in a probate dispute? (Fam. Code 760.)

Published on: July 24, 2024 | By Underwood Law Firm, P.C.

underwood-ownership-presumption-probate-300x300 The purpose of this article is to explain the ownership presumption in a probate dispute. This is because property ownership can cause disputes even after death, which must be resolved in the probate or civil courts. (Schlyen v. Schlyen (1954) 43 Cal.2d 361, 370–371.) Specifically, the understanding of how marriage affects ownership presumptions in probate matters was changed in the 2021 case Estate of Wall (Wall). ((2021) 68 Cal.App.5th 168.) This case affects how trial and probate courts will consider ownership disputes. Because this specific case dealt with a probate action, it concerns the property and assets of a decedent. In Wall the court held that the title presumption prevails over the community property presumption.

What is an Ownership Presumption?

Marriage and death can both affect the presumption of who owns a disputed piece of property. There are two main presumptions which affect these disputes. First, the title presumption is that the property title being in a person’s name means that person will prevail in an ownership dispute. (Pearce v. Briggs (2021) 68 Cal.App.5th 466, 483.) The title presumption is derived from the evidence code. (Evid. Code, § 662 .) Second, the community property presumption is that the property being purchased with community funds of a married couple means the property belongs to the community (both parties) in a property dispute. (In re Brace (2020) 9 Cal.5th 903, 938.) The community property presumption is based on the family law code. (Fam. Code, § 760.) If a court rules the title presumption will prevail that means the person with their name on the title will prevail even if the property was bought during their marriage with community funds.

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A Guide to “Necessary” Parties in a Partition Action (CCP § 872.510.)

Published on: July 12, 2024 | By Underwood Law Firm, P.C.

underwood-guide-necessary-parties-partition-action-300x300 The purpose of this blog post is to discuss who must be named in a partition lawsuit. It is important to name all the necessary parties so that the Court can properly issue a judgment at the conclusion of the partition action. As partition lawsuits involve rights to property, it is pretty obvious that the owners of the property and the mortgage broker should be joined. But the question becomes more difficult as the interests become less connected, like easement holders or other persons who have liens against the individual owners. As such, this article aims to provide clarity on the process.

What Does the Law Say?

Under Code of Civil Procedure section 872.510, the plaintiff must join as defendants all persons having or claiming interests in the estate, persons who are actually known to the plaintiff to have such interests, or persons who, from an inspection of the property, appear to have such interests. Sections 872.510 to 872.550 define “interest,” as situations, includes liens, and a “lien” means a mortgage, deed of trust, or other security interest in property whether arising from contract, statute, common law, or equity. According to the Legislative Committee Comment, under Section 872.510, only persons having interests in the estate or estates as to which partition is sought need to be joined.

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Is a Deed a Contract?

Published on: July 8, 2024 | By Underwood Law Firm, P.C.

underwood-deed-a-contract-300x300 The purpose of this article is to explore the finer distinctions between deeds and contracts. In California law, a deed is one of the most powerful legal documents that any person will ever handle, but there is very little in the public domain available about them in order to understand them better. Moreover, unlike other legal documents that may virtually require an attorney in order to be prepared properly, almost any owner of real estate could likely create an effective deed and transfer real estate with very little effort.

Because deeds are so powerful on the one hand, yet so easy to create on the other, this article seeks to explore some lesser known technical aspects about deeds in order to increase the public’s knowledge about the law.

What is a deed?

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Who Receives Notice of Sale in a Partition Action (CCP § 873.640)?

Published on: June 28, 2024 | By Underwood Law Firm, P.C.

underwood-receive-notice-of-sale-partition-action-300x300 The purpose of this article is to explain a partition sale and who must be notified of a sale. If the co-owners cannot agree about what to do with a property or whether they want to sell it, a partition action may be necessary. This means forcing the sale of the property to divide the co-owners’ interests in it and divide the value of the property accordingly. Because a home or property cannot necessarily be physically split in half, it must be sold. When that sale occurs, the law requires certain parties to receive notice of that sale.

How does a sale in a partition action work?

A property sold through partition generally sells in the same manner as a normal seller. A sale in a partition action is often done through a referee. This is usually done through a public auction or a private sale. If it is being sold publicly through the court, an appraiser will value the property and it will be sold at a public auction which occurs under court supervision. The court may specifically include its own terms for the sale such as all cash, sale on credit with a specified type of security, etc. (CCP § 873.630.)

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Qualified Personal Residence Trusts (26 C.F.R. § 25.2702-5)

Published on: June 19, 2024 | By Underwood Law Firm, P.C.

underwood-qualified-personal-residence-trusts-300x300 The purpose of this article is to explain what a Qualified Personal Residence Trust (QPRT) is. A QPRT is an irrevocable trust which allows the creator, the grantor, to move a home out of their personal estate. This is done to give the home to a future beneficiary with gift tax savings. This is important because a QPRT lets the homeowner stay in the house with a “retained interest” until the specified date. After that date, the remaining interest and ownership of the house transfers to the beneficiary.

A QPRT trust must meet certain provisions: (1) all income generated by the trust must be given to the grantor at least annually (2) trust principal (money) will not be given to anyone besides the grantor before the term ends (3) the trust only holds one property with a reserved right of occupancy for the grantor (4) the trust cannot be terminated and its property cannot be distributed to beneficiaries before the end of the term (5) the residence must continually be the grantor’s primary residence (6) the house cannot become damaged or uninhabitable unless it is repaired or replaced before two years or the term ends (6) the trust cannot be sold or transferred to anyone else during the term. (26 C.F.R. § 25.2702-5; Sohn v. United States (2024) 2024 WL 1182879, at *1.)

A taxpayer who owns a residence can, as the grantor, transfer the property with a deed. This deed must be recorded with the local property registry. This means the home is retitled in the trust’s name. The grantor keeps the right to live in the property which means the taxable value of the home to the trust is discounted under federal tax law. This is important because the longer the grantor stays in the home, the more it can be discounted. When the term ends, the beneficiary gets the residence outright or in “further trust” as asset protection. If the grantor wants to stay in the home, they can rent it at fair market value which allows them transfers more cash to the trust without being taxed.

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A Primer on Transfer on Death (TOD) Deeds (Prob. Code § 5600 to § 5698)

Published on: June 13, 2024 | By Underwood Law Firm, P.C.

underwood-primer-transfer-death-deeds-300x300 The purpose of this article is to explain what a Transfer on Death (TOD) Deed is. TOD Deeds are meant to allowing people, especially elderly people, to transfer their residential property. These deeds are meant make it easier and less expensive to transfer that property without needing a will or living trust that would go to probate.

Before January 2016, the only way to transfer property after the death of an owner was through a joint tenancy with right of survivorship, probate, or a trust transfer deed. The laws creating TOD Deeds were meant to sunset in 2021 but have been extended to 2032.

What is a Transfer on Death deed?

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