Articles Posted in Real Estate Law

underwood-ownership-presumption-probate-300x300The 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.

underwood-deed-a-contract-300x300The 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?

underwood-qualified-personal-residence-trusts-300x300The 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. 

underwood-primer-transfer-death-deeds-300x300The 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?

underwood-bona-fide-purchaser-value-300x300The 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.

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?

Contact Information