California Partition Law Blog

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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A Primer on Short Cause Trials (California Rule of Court 3.735)

Published on: June 7, 2024 | By Underwood Law Firm, P.C.

underwood-primer-short-cause-trials-300x300 The purpose of this article is to explain what a short cause trial is. A short cause case is a civil case where the parties or court estimate the trial will take five hours or less. Because of a short cause trial’s brevity, these types of cases can get priority in the courtroom. These trials can fill time slots between longer, bigger cases so they may be heard earlier.

Short cause trials are common in family law court but can also arise in property disputes. Short cause trials are frequently used to address smaller legal issues and attorney fees and costs. (In re Marriage of Garcia (2017) 13 Cal.App.5th 1334, 1340–1341.) Just like a long cause trial, it is possible to appeal the judgment granted in a short cause trial.

However, just because a matter is tried as a short cause case does not mean it is or should be treated as less important by the courts. If an issue is tried too quickly it will be remanded. For example, a 15-minute trial to decide how to split shared property from a 25-year marriage is much too short to decide such complex issues. (In re Marriage of Brantner (1977) 67 Cal.App.3d 416, 422.) Such a trial would be remanded and deemed an abuse of discretion by the trial court who took so little time for the issue.

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What is a Bona Fide Purchaser for Value? (Civ. Code § 1214)

Published on: May 31, 2024 | By Underwood Law Firm, P.C.

underwood-bona-fide-purchaser-value-300x300 The purpose of this article is to explain what a bona fide purchaser for value is and how that status impacts someone’s property rights. A bona fide purchaser for value (or bona fide purchaser) is someone who acquires a property interest or encumbrance like a property, mortgage, or lease, and meets two specific criteria. A bona fide purchaser must (1) lack knowledge or notice that a prior claim exists on the property and (2) give adequate consideration for that property. (Melendrez v. D & I Inv., Inc., (2005) 127 Cal. App. 4th 1238, 1251.)

Why is the lack of knowledge of a prior claim necessary?

A bona fide purchaser cannot have any knowledge of any prior claims. This is because their purchase makes any unrecorded interest, like the verbal sale of a property, void. (Civ. Code § 1214.) To make sure they have no knowledge of other claims, a bona fide purchaser must make a reasonable inquiry to see if anyone else has a claim to the property. Buyers can do this by hiring a company to conduct a title search. A title search examines public records to determine who legally owns a property. Having this search done ensures there are no defects in the seller’s ability to transfer the property or other competing claims. Someone’s purchaser status is determined at the time the interest or lien is acquired. So, once that person has bought the property, the need for the buyer to not know of any competing claims ends. This is important because any information learned after acquiring the interest does not affect someone’s status as a bona fide purchaser or encumbrancer.

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A Guide to a “Cloud on Title”

Published on: May 29, 2024 | By Underwood Law Firm, P.C.

underwood-guide-cloud-on-title-300x300 The 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?

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Real Estate Commissions in Probate Actions (CCP 873.745)

Published on: May 17, 2024 | By Underwood Law Firm, P.C.

underwood-real-estate-commission-probate-300x300 Probate 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.

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