When can a deed be rescinded? (Civ. Code § 3412)

Underwood-Blog-Images-5-300x300The deed to a property is the most important document a property owner has. It describes the title and its associated rights while operating as the conveyance of property itself. For that reason, the law presumes the validity of deeds without defects on their face. But that does not mean that every deed is legally valid and not subject to cancellation.

In California, there exists a special type of remedy that allows for deeds to be canceled. This, however, is a rare outcome. The deed itself must be void or voidable in order for this to occur. The Underwood Law Firm is well-versed in these types of cancelation claims and holds the skills to help our clients achieve their litigation goals.

What is a deed?

A deed is a written instrument (a document) that conveys or transfers the title to real property; it is an executed conveyance and operates as a present transfer of real property. (Estate of Stevens (2002) 28 Cal.4th 665, 672.) Deeds are also considered written contracts and are, therefore, subject to the rules applicable to and governing contracts. (Civ. Code § 1040; Johnston v. City of Los Angeles (1917) 176 Cal. 479, 485.)

Once executed, a deed becomes the grant itself. Because of this, a valid deed is subject to numerous requirements.

In order for the deed to function as a legally-binding transfer of real property, it must first be in writing. It must also name both the person conveying and receiving the title. It must be signed by the grantor under the Statute of Frauds, delivered to the individual receiving the deed, and finally, accepted by the grantee. (see generally Civ. Code § 1091.) If any of these “essential elements are missing, the deed is ineffective to transfer title.” (In re Marriage of Wozniak (2020) 273 Cal.App.5th 120, 134.)

How is a deed canceled?

California has a special remedy called “cancellation of an instrument” that allows a litigant to cancel a written instrument that is void or voidable. Notably, this remedy is not just for deeds but also may be employed for rescinding mortgages, leases, and promissory notes. (Miller & Starr, Cal. Real Estate (4th ed. 2022-1) § 40:113.)

In essence, cancellation of an instrument is a request for rescission that places the parties where they were before the instrument was ever made. (Deutsche Bank National Trust Co.  v. Pyle (2017) 13 Cal.App.5th 513, 523.) If someone receives a deed that they believe is void or voidable, then they can file a lawsuit to bring this specific cause of action. But there are, however, a number of statutory requirements in place in order to succeed.

The plaintiff in the action has to allege that (1) the instrument will cause serious injury to them if it’s allowed to stand, (2) the instrument is valid on its face, (3) the instrument is nonetheless void or voidable, (3) the instrument was in existence at the time the lawsuit was filed, and (5) if the instrument is voidable, as supposed to void, then the plaintiff acted promptly to rescind it. (Civ. Code § 3412, 3413.)

When is a deed void or voidable?

Simply put, if a deed is not void or voidable, it cannot be canceled. A classic example of this is when the deed is executed by someone lacking legal capacity. If someone is mentally incapacitated due to extreme old age, for instance, then they lack the capacity to contract, and without a conservatorship in place, their purported conveyances will be void.

But the capacity to contract is not the only grounds for establishing a void or voidable deed. Another common reason is that there was undue influence existing at the time of the transaction. Under the Civil Code, undue influence involves taking an unfair advantage of another’s weakness of mind or taking a grossly unfair advantage of another’s distress. (Civ. Code § 1575.)

If a party can show the transaction occurred only due to undue influence, then the deed is voidable and capable of being rescinded. (Fallon v. Triangle Management Servs. (1985) 169 Cal.App.3d 1103, 1106.) Similarly, deeds obtained through fraud are also voidable and subject to the same remedy. (Id.)

Can you cancel a deed that is not void or voidable?

No. The laws of deeds overwhelmingly emphasize that most deeds are valid, even when they bear minor defects. To hold otherwise would be to throw nearly every real estate transaction into doubt, which is certainly an outcome that the Legislature and judiciary have sought to avoid.

Normally, if a deed is delivered to a grantee (the person who is receiving the deed and the associated property interest), then it “becomes an operative deed, freed from any condition not expressed in the deed.” (McMillin v. Eare (2021) 70 Cal.App.5th 893, 914.) Moreover, just because a deed is a gift or the consideration received for the deed is minimal does not mean that the deed is subject to being canceled. “It is settled that a deed without fraud in its inception conveys title and is not void for any failure of consideration.” (Wooster v. Department of Fish & Game (2012) 211 Cal.App.4th 1020, 1030.)

For example, supposed “Shawn” and “Julie” are siblings. Shawn decides he wants to add his sister Julie to the deed on his house out of kindness. He executes (signs) and delivers the deed to Julie, making her a co-owner of the property. Years later, he decides adding her to the deed was a hasty decision and wants to undo the transaction.

Shawn, therefore, brings a lawsuit to cancel the deed. The court almost certainly, will throw the suit out because the deed is not void or voidable. Unless there was fraud going on when Shawn signed and delivered the deed, it could not be rescinded just because he decided to change his mind. 

How can the Attorneys at Underwood Law Assist You?

Deeds are, far and away, the most important document associated with one’s property. It follows, then, that actions to cancel them are not a matter taken lightly by the courts. Bad-faith claims will be dismissed with regularity, and attempt to demonstrate fraud will be subject to California’s enhanced pleading requirements for asserting that cause of action.

As each case is unique, property owners would be well-served to seek experienced counsel familiar with deeds and the law surrounding them. At Underwood Law, our knowledgeable attorneys are here to help. If you are concerned about whether your deed is subject to rescission, seeking to understand your property rights, or if you just have questions, please do not hesitate to contact our office.

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