California Real Estate Law Ninth Edition 2019 Unit 9-12

deficiency judgement

A judgement given to a creditor when a foreclosure sale is for less than the amount owed (judgment is for deficiency amount) Should the judicial foreclosure sale bring less than the amount owed on the mortgage, the foreclosing lienholder can apply for a deficiency judgement for the difference, but must do so within three months of the sale. Only after the judicial foreclosure sale can the mortgagee sue the mortgagor for any deficient amount. Very few deficiency judgements are granted, because they are not possible in the following four situations: 1) Foreclosure is under a power-of-sale clause. (no deficiency judgements for mortgages or trust deeds foreclosed under power of nonjudicial sale are allowed.) 2)The foreclosing lien is a purchase money loan. There can be no deficiency judgement when the seller provided credit. The seller started out owning the property and ends up owning it, a situation called a purchase money mortgage. 3) Money advanced by a third party lender for purchase purposes is also a purchase money loan. A mortgagee who provides funds to purchase one to four residential units for occupancy by the mortgagor cannot obtain a deficiency judgement. Purchase money third-party lenders can obtain deficiency judgements for five or more residential units, non-owner-occupied residential property, or nonresidential property. 4) The fair market value the property is equal to or greater than the amount of the lien. A deficiency judgement is possible only for the difference between the fair market value of the property and the amount of the lien. This prohibits a mortgagee from bidding much less than is owed to manufacture a deficiency. In the case of Enloe v. Kelso (2013) 217 C.A.4th 877, the lender making a first and second trust deed would not allow the seller to carry back a third trust deed. After escrow was closed, the seller took back a third trust deed, which was distinguished to appear to be a hard-money loan. After a short sale, the seller sought a deficiency judgement. The trial court granted judgement in favor of the buyer and the Court of Appeal affirmed, holding that the third deed of trust was in fact purchase money loan, which barred a deficiency judgement (Code of Civil Procedures 580b) Note: An attempt was made to show that the seller had given cash to the buyer for the trust deed. 5) If a lender gives approval for a short sale involving one to four residential units, a deficiency judgement is not possible. Anti-deficiency-judgement protection does not extend to debtors when the loan is procured by fraud. A borrower cannot waive anti-deficiency-judgement protection in advance or at the time the loan or loan renewal when the buyer is likely to be under coercion of thereunder. A sold-out junior lienholder whose rights were lost by the foreclosure may sue the mortgagor directly for the note. However, if the junior lienholder had made a purchase money loan, which would have precluded from a deficiency judgement, no further collection would be possible. The case of First Commercial Mortgage Company v. Reece (2001) 89 C.A.4th 731 involved a purchase money loan of $207,593 that was allegedly made on and inflated $215,000 appraisal. The lender, First Commercial, sold the leant First Nationwide Mortgage Co. with the agreement that First Commercial repurchase an bad loans. After default to the buyer, First Nationwide foreclosed and purchased the property with a full-credit bid. As agreed, First Commercial repurchased the property, which they subsequently sold for $79,252. First Commercial then sued the mortgage broker alleging fraud and negligent representation, as well as breach contract. The superior court ruled that the full-credit bid rule at foreclosure satisfied the loan debt; therefor, this plaintiff could not prove damages. The Court of Appeal reversed, ruling that the full-credit bid does not bar a repurchasing lender who suffers damages by isrepresentation, fraud in the inducement, or breach contract. Note: If First Commercial had been the one making the full-credit bid, then it would have been an admission of property value, so damages could not be shown. Even though a deficiency judgement is not possible, it could be a mistake for a creditor to bid the full amount owed under the foreclosing lien. The case of Atlus Bank v. State Farm Fire and Was Co. (1991) 758 F. Supp.567 involved a fire loss. After the loss, there was a foreclosure sale and the lender bid its full-credit amount owed. The lender then brought action against the insurance carrier for actin gin bad faith by refusing to pay the insurance loss. The court held that the mortgagee's full-credit bid at foreclosure extinguished the mortgagee's right to make a claim against the homeowner's insurer of the fire loss. In this case, the loss exceeded the debt. By bidding the full amount of the debt owed, the bank cut off any chance of other offers relating to true value. By a full-credit bid, the bank was stating that the property was worth what they paid. The court also pointed out that the insurer had no duty to tell the mortgagee the effect of a full-credit bid. During the early 1980s, some purchasers were buying properties without down payments, and then renting the property. They were pocketing the rent receipts and not making payments on the mortgages. Because the seller's financing constituted purchase money loans, they felt immune from deficiency judgements. Civil Code Sections 890-895 were enacted to provide criminal penalties for using rental income during the first year after purchase without first applying it copayments on debts secured by the property (rent skimming).

adverse possession

A method to acquire title. It requires five-year, open, notorious, uninterrupted use under some claim of right, and the payment of taxes. Involuntary transfers of real property Besides foreclosure sales, sheriff's sales, tax sales, and property that escheats to the state (discussed later in this unit), title can be passed involuntarily - without the consent of the owner - in several ways. Adverse Possession - A user of land can acquire title to the land of another by adverse possession. The rationale is that property should be used productively and taxes should be paid. Several conditions must be met: -The possession must be an actual occupation. A person need not actually live on the property to get title by adverse possession. The person must, however, use or fence the property. Title cannot be claimed for more that what a person exercises dominion over, except when a person claims title under a defective deed. Title to all the property described in the deed could be obtained under adverse possession, even if all of the property were not used. There also must be exclusive use. If another adverse user or the owner is also in possession, an adverse user cannot gain title by adverse possession. - A claim of occupancy can be based on the occupancy if a tenant of the person claiming the adverse interest. - Possession must be open, notorious, and hostile to the true owner's title. If a person uses property with permission, that person will not be able to get title by adverse possession because the use is not hostile. A tenant, therefore, could not obtain title by adverse possession because the tenant would be in possession of with permission. -Use must be under a claim of right or color of title. A claim of right for adverse possession does not mean that a person believes he has title; it means only that person claims title against others. Any hostile use would be regarded as a claim of right. Color of title could be a claim under a defective document - for example, a forged deed or a deed that is void because of a defect. - Possession must be continuous and uninterrupted for a period of five years. The five year period is satisfied if an adverse user uses the property for two years and a successor in interest to the adverse user uses the property for an additional three years (tacking on). For tacking on, there must be some sort of privity (mutual or successive relationship) between two users. While the use does not have to occur every day, it must be of a continuous nature. If the use is interrupted, a new five year period will start. - The adverse possession claim must include certified record from the tax collector that the adverse user has paid all property taxes for five years. If the owner continues to pay taxes, the adverse user cannot obtain title unless these also paid the taxes. Use based on a mistaken boundary probably would not give the adverse user title because no taxes would have been paid. However, a prescriptive easement might arise. Title cannot be taken from a governmental entity, public entity, or railroad by adverse possession. Title also cannot be taken from a minor or insane person. The five year continuous use must occur when an owner is competent. An adverse user cannot get greater rights than the true owner had. For example, the adverse possession of the surface would not include any mineral rights previously separated from the land. A use cannot defeat future interests by obtaining an interest by adverse possession. If the true owner had a life estate, by adverse possession all the adverse user could obtain would be an estate for the life of the former life tenant. To obtain a marketable title. an adverse user either would have to obtain a quitclaim deed from the title owner of record or would have to commence a quiet title action to have the court determine ownership. An adverse user who recorded a court's determination of title in the adverse user would have a marketable title.

deed

The transfer instrument for real property Before the statute of frauds, title was passed by a voluntary ceremony known as livery of seisin. The parties would physically indicate transfer of title through the symbolic transfer of a clod of earth, a twig, or a key. In became common for unscrupulous individuals, using perjured testimony, to claim transfer when in fact liver of seisin had not taken place. The statute of frauds was really enacted to defeat this type of fraud. The statute of frauds requires that transfers of real property interests be in writing (Civil Code Section 1624) The deed is the transfer instrument in a voluntary transfer. When the deed is properly executed, delivered, and accepted, it transfers title to real property from a grantor to a grantee. REQUIREMENTS OF A DEED WRITTEN - The statute of frauds requires that every instrument dealing in rights in real estate, other than a lease for one year or less, be in writing. EXECUTION - The deed must be executed - that is, signed - by the grantor. The grantee, who receives the deed, need not sign the deed. The grantor must sign the deed with the same name in which the grantor took title. If there is a material variance in the name, the recording of the deed will not provide constructive notice of transfer. For example, a married woman who is conveying a title that she took before her marriage must identify the maiden name or different married name under which the title was taken. An attorney-in-fact may convey marketable title only if the power of attorney under which the deed is executed is acknowledged and recorded, A deed that is executed in blank does not transfer title when a property description is inserted at a later date by another person unless that person was authorized to insert the description. A forged deed is void and transfers no interest. A deed containing unauthorized alterations also is void. A criminal court can void false or forged deeds without the necessity of quiet title action. DESCRIPTION - The property must be described sufficiently so that no doubt exists about the identity of the property being conveyed, and the boundaries must be positively located. A legal description is not required on a deed, although title insurance cannot generally be obtained in the absence of a legal description. DELIVERY- To transfer title, a deed must be delivered. The most important element of delivery is the intent of the grantor. The grantor must intend to transfer title irrevocably to the grantee or a trustee and to divest the grantor title immediately. The grantor's intent can be determined by words or acts before, at the time of, and after execution of the deed. In an actual delivery, the grantee received the deed. Although an agreement for a future transfer of title is not a delivery, a legal delivery is possible, even if the grantee's right to possession and enjoyment of the property are to accrue at a future date. For example, a deed could be given in an irrevocable trust to be given to a grantee at a later date. The delivery of a deed to third party where the grantor cannot get the property back is considered a constructive delivery. Recording the deed creates a presumption that the deed was delivered. A deed also is presumed to have been delivered if it is in possession of the grantee. However, if the grantor is in possession of the deed, it is presumed it is presumed not to have been delivered. These presumptions can be overcome by evidence to the contrary, and legal delivery can remade even if the deed was not physically transferred. A deed to more than one grantee need be delivered to only one of them for effective delivery. Delivery must be absolute; it cannot be conditional. For example, assume a deed is given to a third party to hold with the provision that it should be returned to the grantor's son upon the grantor's death but it should be returned to the grantor upon the grantor's request. In that case, title would not pass because the transfer was conditioned on the grantor's not voiding it before death. See Stone v. Daily (1919) 181 C. 571 ACCEPTANCE - To be valid, a deed must be accepted. The law will not force a person to take title. Acceptance generally is presumed if the grant is to the benefit of the grantee. Failure to repudiate a transfer within a reasonable time also will imply its acceptance. Acts, words, or conduct of the grantee could show an intent to accept. Any exercise of dominion over the property, such as repairing it, occupying it, placing a sign on it, putting the property on the market, or borrowing on the property, would show acceptance of the grant. If the grantee conditionally accepts the grant, title does not pass to the grantee until the conditions are satisfied. GRANTING CLAUSE- While particular wording is not required, the language of the deed must clearly indicate a transfer of title. COMPETENT PARTIES - The grantor must be a competent party. In the case of a gift deed, however, the grantee can be an incompetent or a minor. In this situation, the legal representative of the incompetent or minor would accept the deed or acceptance could be presumed on the basis the grant was beneficial. GRANTEE - The grantee must be identified. While a grant may be made to a real person using an assumed name, title cannot pass to a nonexistent person. NOT REQUIRED FOR DEEDS ACKNOWLEDGEMENT- Acknowledgement is made by a grantor before a notary public or another authorized person. The grantor acknowledges that the signing of the deed is the grantor's own free act. The notary has a duty to determine the identity of the person executing the document. The notary and the notary's sureties would be liable for negligence in ascertaining the identity of the person signing. A deed need not be acknowledged to be a valid transfer, but without acknowledgement, the deed will not be accepted for recording. California notaries must now obtain the right thumbprint of the grantor of any deed in their record books. RECORDING- Between the parties, an unrecorded deed can convey good title. However, an unrecorded deed does not give constructive notice to the world of the grantees interest. Besides acknowledgement, a deed to be recorded must contain the name and address to which future tax statements are to be sent. The recorder also will require that the documentary transfer tax be paid before recording. The county tax accessor requires filing a Change of Ownership form. CONSIDERATION - While a promise to give a deed would require consideration in order to be enforceable, a deed is not a contract. It is a completed transfer, and consideration generally is not required. However, consideration is required for deeds by personal representatives (executors, guardians, attorneys-in-fact, etc. If a deed is given without consideration or for inadequate consideration while the grantor is insolvent, creditors of the grantor or a trustee in bankruptcy might be able to reach the property because the transfer would have constituted fraud against the creditors. While the courts ordinarily are not concerned with the adequacy of consideration, inadequate consideration would be admissible to show fraud or undue influence. The recording of a deed given without consideration would not give the grantee priority over prior unrecorded conveyances and encumbrances for value. The conveyance of a deed given on the promise of later consideration will remain valid, even in the event of failure to give the consideration. MANNER OF TAKING TITLE - The deed need not indicate how title is being taken. If the grantee is a single individual, the grantee would take title in severalty. In the case of more than one grantee, it would be presumed that they are taking the title as tenants in common. An exception to this is that deeds to both spouses in a marriage that do not indicate how title is to be taken pass the title as community property. WITNESSES AND SEALS - In California, deeds need not be witnessed (unless they are signed with an X), nor are seals required. As for other documents, the presence a seal on a corporate deed creates the presumption that the person signing had corporate authority. Revocable transfer on death deed This deed does not affect possession or ownership while the owner is alive. If not revoked by the owner, it transfers title to the beneficiary upon the owner's death without necessity of probate. Void and voidable deeds A void deed transfers no interest whatsoever, even if a purchaser paid value and acted in good faith. The following would make a deed void: -Forgery -Alteration -The fact that the grantor is a minor - The fact that the grantor has been declared insane or is entirely without understanding -Failure of delivery Voidable deeds are valid deeds unless or until they are voided. The following would allow a deed to be voided: -Fraud -Undue influence -Duress or menace -The grantor's not being of sound mind (but not declared insane or entirely without understanding) The statute of limitations to challenge a void or voidable deed is 5 years, 20 years if the claimant is a minor or insane (Civil Codes Sections 318, 319, and 328).

anti merger clause

A clause in a mortgage or trust deed that the senior lien holder will retain lien priority in the event of a merger (title given to the senior lienholder) An anti merger clause in a mortgage provides that the senior lienholder will retain priority over junior liens in the event of a merger. Normally, a lien is extinguished by a merger when the lienholder acquires title. If there is an anti merger clause, a foreclosing junior lienholder will be paid only after the sale proceeds have satisfied the senior encumbrances.

defeasance clause

A clause that cancels the lien on payment of the note. When a mortgage is recorded, it becomes a lien on the property. When the note is paid, the mortgagee gives the mortgagor a "satisfaction of mortgage." The satisfaction, when recorded, removes the lien. The defeasance clause in the mortgage provides for the cancellation of the lien upon full payment.

due-on-sale clause (alienation clause)

A clause that makes the entire loan balance due when the property is sold. A loan having a due-on-sale clause cannot be assumed. From Common Provisions of Notes Due-on-sale clause Also known as alienation clause, the due-on-sale clause calls for the note to repaid in full upon sale of the property. (It accelerates payments) Loans with due-on-sale clauses cannot be assumed. A number of state courts determined that loans made by private individuals and state-licensed lenders were assumable loans despite the language in the notes. In California, in Wellenkamp v. Bank of America (1978) 21 C.3d 943, the court determined that an institutional lender could not automatically enforce a due-on-sale clause unless the sale increased the risk of default or impaired the lender's security. Based on California decisions, a huge number of loans with due-on-sale clauses were assumed. Decisions in Californian and other states seemed to indicate that all loans were assumable (including those made by federally chartered lenders) unless the assumption impaired the lender's security or otherwise increased the lender's risk In 1982, the U.S. Supreme Court, in Fidelity Federal Savings & Loan v. de la Cuesta (1982) 458 U.S. 141, determined that due-on-sale clauses were fully enforceable by federally licensed lenders. After the de la Cuesta decision, saving associations chartered by states were requesting federal charters to be able to enforce their due-on-sale clauses. Congress then passes the Garn ACT (Garn-St. Germain Depository Institution Act). The act allowed lenders to enforce due-on-sale clauses unless the loan was made or assumed under state law that allowed loan assumptions at that time. Such loans remained assumable until October 15, 1985 ( three year window period for assumption). The due-on-sale full enforcement by federally chartered lenders was not affected by the act. Because due-on-sale clauses are now considered fully enforceable by lenders, a number of methods have been devised to get around the assumption prohibitions. They are at best of questionable legality and at worst could subject the property owner and broker to criminal liability or fraud against a lender. These methods include: - long term unrecorded lease options - unrecorded land contracts - friendly foreclosures, in which the lender is really the buyer and the seller does not make payments, so the lender forecloses and obtains the buyer's interest. - land trusts Not all transfers trigger the due-on-sale provision of notes. Exceptions include transfers resulting from the death of one of the coborrowers and from the dissolution of a marriage, as well as transfers resulting from the foreclosure of a junior lien. A lender knowing of a transfer and failing to act might waive its rights to enforce the due-on-sale clause In Rubin v. Los Angeles Federal Savings and Loan et al. (1984) 159 C.A.3d 292, the Court of Appeal refused to allow enforcement of the due-on-sale clause because the lender knew of the transfer for four years before it demanded the full payment. The court stated that "although waiver is frequently said to be the intentional relinquishment of a known right, waiver must also result from 'conduct' which according to its natural import is so inconsistent with the intent to enforce the right in question as to induce a reasonable belief that such a right has been relinquished..."

sheriff's deed

A deed given after a sheriff's sale A sheriff's deed is given at execution of a judgement under a sheriff's sale. It transfers only the former owner's interest and contains no warranties (see Unit 10)

tax deed

A deed given at a tax sale A tax deed is given when property is sold by the tax collector to the public for nonpayment of taxes. After one year from date of purchase, the property is acceptable for title insurance. Because real estate taxes are a priority lien, a tax sale removes junior encumbrances.

gift deed

A deed given for love and affection Any deed where no valuable consideration was given is considered a gift deed. The deed is valid unless it was given to defraud creditors, in which case it can be voided.

warranty deed

A deed in which the grantor warrants good title Under a warranty deed, the grantor expressly guarantees a good title and agrees to defend the title and to be liable if the title if defective. Because of the use of title insurance in California, warranty deeds are not commonly used.

quitclaim deed

A deed that conveys whatever interest the grantor has without claiming any specific interest A grantor under a quitclaim deed transfers only the interest that the grantor has and makes no warranties of title. If the grantor has fee simple title, then that is the title conveyed. If the grantor has only a life estate, then only the life estate will be conveyed. Quitclaim deeds often are used to clear title from grantors who have possible or disputed interest.

marketable title

A defensible title that a reasonably prudent purchaser would accept Adverse possession To obtain a marketable title. an adverse user either would have to obtain a quitclaim deed from the title owner of record or would have to commence a quiet title action to have the court determine ownership. An adverse user who recorded a court's determination of title in the adverse user would have a marketable title.

Equal Credit Opportunity Act

A federal act prohibiting credit discrimination because of sex, marital status, age, race, religion, or natural origin, or because the credit applicants receiving welfare. The Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.) enforced by the Federal Trade Commission prohibits credit discrimination because of sex, marital status, age, race, color, religion, or national origin, or because income comes from a public assistance program or because applicant has in good faith exercised any right under the Consumer Credit Protection Act. Credit considerations are limited to income, net worth, employment stability, and credit rating. Individuals may file a discrimination complaint with HUD or sue for damages. The Department of Justice may file lawsuit when it believes a pattern of discrimination exists.

balloon payment

A final payment that is more than twice the amount of the lowest payment Partially amortized notes Balloon Payments Often, installment notes provide the entire balance will be due at a date before the note's being fully amortized. Such notes are called partially amortized notes, and the large payment is known as a balloon payment. A balloon payment is described as a payment more than twice the amount of the smallest payment (Business and Professions Code Section 10244) Balloon payments are limited for regulated loans made or arranged by loan brokers. These restrictions do not apply to first trust deeds of $30,000 or more, or to second trust deeds of $20,000 or more (Business and Professions Code Section 10245), nor do they apply to construction loans or notes given by the buyer to the seller to finance the purchaser or to loans made by institutional investors. A loan with a term of less than three years for non-owner-occupied property may not have a balloon payment. A loan with a term under six years on an owner-occupied dwelling of fewer than three units may not have a balloon payment. The holder of a balloon note secured by an owner-occupied dwelling of four or fewer units must give from 90 to 150 days' warning if the due date of the balloon payment. Construction loans and loans where seller financial disclosures have been made are exempt from the notification requirement.

formal will

A formal will must be signed in the presence if at least two witnesses who, at the maker's request, attest to the testators declared will. Beneficiaries under the will may not be witnesses. While a former will need not be dated, an undated will could create problem when more than one will is found because the dated will is presumed to be the latest in time.

Living trusts

A living trust may be used in addition to a will. Under a living trust, the trustor(s) generally transfer their property to themselves as trustees for the beneficiaries, who are usually the same people. The living trust, which is a revocable trust, avoids probate because the trusters have already conveyed their property to the trust. The trust provides for the division of the property after the death of the last trustor. The successor trustee makes the conveyance, thus avoiding probate costs and delays.

blanket encumbrance

A mortgage or trust deed covering more than one property A blanket encumbrance is a lien (mortgage, trust deed, or real property sales contract) that covers more than one property. In the absence a release clause, which provides for the release of properties from the blanket encumbrance upon the payment of agreed sums, the debtor would have to payoff the entire blanket encumbrance to convey a property free of the lien. Lenders often insist on blanket encumbrances to provide themselves with greater security.

administrator

A person appointed by the court to manage the estate of a deceased person The legal procedure to carry out the wishes of the deceased and pay her debts Probate is the legal procedure that provides for the transfer of the real and personal property of the deceased, as well as payment of the debts of the deceased. The person appointed under the will to serve as the personal representative of the deceased during probate is commonly referred to as the executor. If the deceased died intestate (without a will) the court will appoint a personal representative (commonly referred to as an administrator) to represent the deceased.

holder in due course

A purchaser of a negotiable instrument for value before its due date when the instrument appears proper on its face and the purchaser has no notice of any prior dishonor, defenses of the market, or defects in the title of the transferor. (Continued from negotiable instruments) If the note was negotiable, Anthony could not raise these personal defenses against a transferee (Clark) from Bertrand who was a holder in due course, often called a BFP - bona fide purchaser Anthony -Maker Bertrand - Payee Clark - Holder in due course For a party to be a holder in due course - the instrument must be proper and complete on its face - the holder must have acquired the instrument before its due date without any notice as to previous dishonor - the transferee must have been a good-faith purchaser for value - the transferee must have had no notice of any defenses of the maker or any defects in the title of the transferor of the paper. Assume that the maker (Anthony) had already paid the payee (Bertrand) but had failed to get back the note. While Anthony would have a valid defense against any efforts by Bertrand to collect again on the note, Anthony could not use the prior payment defense against Clark, a transferee from Bertrand, who is a holder in due course. Because a holder in due course is not subject to the personal defenses of the maker, the holder in due course has greater rights than the payee (Bertrand) Some defenses are valid against even a holder in due course. these are known as real defenses and include - incapacity - the maker lacked legal or mental capacity - illegality - the note was executed for an illegal purpose - forgery - material alteration by the holder. (If the note were raised by a prior holder, a holder in due course could collect on the original terms) The case of Wilson v. Steele (1989) 211 C.A.3d 1053 involved a note secured by a trust deed that was given by a homeowner for remodeling work performed by an unlicensed contractor. The assignee of the note claimed to be protected as a holder in due course. Business and Professions Code Section 7031 requires contractors to be licensed. The Court of Appeal held that because the contractor was not licensed, the contract was illegal and unenforceable. Commercial Code Section 3305 (2)(b) provides that a holder in due course takes free from defenses, but one of the exceptions is illegality of the transaction, which renders the obligation a nullity.

escheat

A reversion of property to the state when a person dies without a will or heirs If a person dies intestate and that person's representative is unable to locate an heir within two years after death, the attorney general will bring an action to declare title tube vested to the state. If heirs fail to come forward within five years after the person's death, the property will escheat to the state (Probate Code Sections 220-231), and it can be sold.

financing statement

A statement that when filed with the secretary of state becomes a lien on personal property for five years. Security Agreements - Personal Property Under the Uniform Commercial Code, a security agreement (often called a chattel lien or chattel mortgage) creates a security interest in personal property. The security interest is then perfected when a financing statement has been filed with the secretary of state. Security agreements for consumer goods, growing crops, and growing timber are filed with the county recorder. A financing statement, after filing, becomes a lien on the personal property for five years. Continuation statements can be filed for additional five-year periods, A termination statement, when filed, would remove the lien. Personal property liens are extremely important in the sale of business opportunities and real property containing personal property, such as furnished motels and apartments. Besides a normal title search, a purchaser would want to check for possible liens against the personal property.

will

A testamentary instrument testate succession A will is a testamentary declaration about the disposition of a person's property, to take effect upon the maker's death. A will is said to be an ambulatory instrument because it cane changed anytime before the maker's death. The maker of a will is a testator (trix, formerly added as a suffix to designate a woman, is not used in this book) Anyone 18 or older and of sound mind may make a will. The testator must understand the nature of the testator's property and the disposition of th property. A later valid will that makes a complete disposition of the property if the testator in a manner different from an earlier will serves to revoke the earlier will. A codicil, and amendment to a will, requires the same formalities as a will. A devise is a transfer of real property by will. A bequest is a transfer of personal property. Legacy refers to money

fictitious trust deed

A trust deed that is recorded for the sole purpose of being referenced another trust deeds to incorporate its terms Fictitious trust deed Recording costs are charged per page. To reduce such costs, lenders record what is known as a master fictitious trust deed that includes all of their special provisions (boilerplate). Each trust deed then can be a simpleton-page document that incorporates by reference all the provisions of the fictitious trust deed.

Garn Act

Allowed lenders to enforce due-on-sale clauses. After the de la Cuesta decision, saving associations chartered by states were requesting federal charters to be able to enforce their due-on-sale clauses. Congress then passes the Garn ACT (Garn-St. Germain Depository Institution Act). The act allowed lenders to enforce due-on-sale clauses unless the loan was made or assumed under state law that allowed loan assumptions at that time. Such loans remained assumable until October 15, 1985 ( three year window period for assumption). The due-on-sale full enforcement by federally chartered lenders was not affected by the act Because due-on-sale clauses are now considered fully enforceable by lenders, a number of methods have been devised to get around the assumption prohibitions. They are at best of questionable legality and at worst could subject the property owner and broker to criminal liability or fraud against a lender. These methods include: - long term unrecorded lease options - unrecorded land contracts - friendly foreclosures, in which the lender is really the buyer and the seller does not make payments, so the lender forecloses and obtains the buyer's interest. - land trusts Not all transfers trigger the due-on-sale provision of notes. Exceptions include transfers resulting from the death of one of the coborrowers and from the dissolution of a marriage, as well as transfers resulting from the foreclosure of a junior lien. A lender knowing of a transfer and failing to act might waive its rights to enforce the due-on-sale clause

tacking on

Allowing successors in interest to add on their adverse use in obtaining the five years necessary for an easement by prescription or title by adverse possession. Adverse possession - Possession must be continuous and uninterrupted for a period of five years. The five year period is satisfied if an adverse user uses the property for two years and a successor in interest to the adverse user uses the property for an additional three years (tacking on). For tacking on, there must be some sort of privity (mutual or successive relationship) between two users. While the use does not have to occur every day, it must be of a continuous nature. If the use is interrupted, a new five year period will start.

color of title

An appearance of having title without necessarily having any legal interest. Adverse Possession -Use must be under a claim of right or color of title. A claim of right for adverse possession does not mean that a person believes he has title; it means only that person claims title against others. Any hostile use would be regarded as a claim of right. Color of title could be a claim under a defective document - for example, a forged deed or a deed that is void because of a defect

exception in a deed

An exclusion of part of the property from a grant. Exception in a deed An exception withdraws part of the described property from the grant. For example, the grantor, after describing the deeded property, could except the south 20 feet from the grant. Exceptions in deeds often use the word "sans," which means "without" Not to be confused with Reservation in a deed The retention of a right, such as an easement, in the grantor Reservation in a deed A reservation in a deed gives the grantor a right that did not exist separately before the grant. For example, a grantor could reserve an easement over the property conveyed, retain a life estate, and retain oil and mineral rights, and so on

inverse condemnation

An owner's forcing a governmental unit to take property by eminent domain when the government's actions resulted in the owner's inability to use the property If an owner is unable to use the property as a result of public action, an action could be brought for inverse condemnation to force condemnation proceedings. For example, if the construction of a new airport caused jets to pass 500 feet over the roof of a house, the noise might destroy the owner's peaceful use of the premises, and an action for inverse condemnation would be proper. If a public entity delays for more than six months in commencing eminent domain after announcing it will take the property, an owner can bring an action for inverse condemnation (Code of Civil Procedure Section 1245.260)

controlled business arrangement

Businesses that are owned or controlled by real estate brokers that the broker refers buyers and sellers to (RESPA requires disclosure). RESPA allows a controlled business arrangement. A broker can refer business to service providers that the broker has a financial interest in. However, a disclosure must be made as to charges and relationships. The broker may only receive compensation based profit sharing of the controlled business arrangement, not based on referrals. The controlled business arrangements must function as a separate business.

Other methods of transfer

By holding property in joint tenancy, property is automatically transferred to the surviving joint tenant(s) upon death of one joint tenant, thus avoiding probate. A revocable transfer on a death deed can also be used to avoid probate. The property is deeded to a beneficiary, but it can be revoked during the owner's lifetime. The ownership is not affected until death, and if not revoked, transfers title to the beneficiary.

California Housing Financial Discrimination Act of 1977 (Holden Act)

California act prohibiting lender discrimination for any reason unrelated to the credit of the loan applicant The 1977 California Housing Financial Discrimination Act of 1977, also called the Holden Act, states that lender cannot deny a loan or change loan terms for reasons unrelated to the credit of the loan applicant. Thus, redlining is prohibited, as it is under the Civil Rights Act of 1968. All other discrimination is also prohibited (Health and Safety Code Sections 3500 et seq.) The State Business and Transportation Agency enforces the act and can require compliance as well as a $1,000 payment to people discriminated against. The act applies to owner-occupied residences of one to four units.

Covered Loan Act

California act setting forth prohibited predatory lending practices for specified FNMA-conforming loans. California's Covered Loan Act (Financial Code 4970) defines a covered loan as one that does not exceed the conforming loan limit for a single-family mortgage loan established by the Federal Mortgage Association (FNMA) and either the APR is more than 8% above the yield for Treasury securities or the total points and fees exceed 6% of the loan. For covered loans - prepayment fees a re limited to specified conditions and then only during the first three years of the loan - loans for five years or less must be fully amortized - negative amortization is limited to first loans and must be clearly declared - advance loan payments from the loan proceeds are not allowed - borrower default cannot trigger increase in interest rate - the loan originator must reasonable believe that the borrowers will be able to make payments from sources other than their equity in the property - payments from loan proceeds cannot beamed directly to a home improvement contractor (cane made jointly to to homeowner and contractor) - the lender cannot recommend borrower default on any existing loan - the lender may not accelerate debt and lender's discretion (call provisions) - refinancing without discernible benefit to the borrowers is prohibited - steering a borrower to a higher-risk-rated or higher cost loan product than the borrower is qualified for is prohibited - structuring a loan as a line of credit as an attempt to circumnavigate predatory lending restrictions is prohibited - any loan fraud is prohibited

certificate of sale

Certificate issued to purchaser at sheriff's sale. (The sheriff's deed is given at the expiration of the redemption period)

dragnet clause

Clause in a trust deed that allows future advance to take precedence over intervening liens Construction loan The advances under the loan are covered in a dragnet clause that includes the future advances and prevents a subsequent lien from taking priority over the loan advances.

construction loans

Construction loans are normally short-term loans for a term of one to three years, depending on the type of building and customarily bear a higher rate of interest than permanent financing. Loan payments ordinarily are released based on performance of construction tasks the final payment usually is not made until the mechanic's lien period has expired. If the builder has not protected the lender through a bond, the lender will insist on lien waivers from all material suppliers and subcontractors. Otherwise, the money might not be sufficient to finish construction. The payments under a construction loan are known as obligatory advances because the lender is obligated to make the payments The advances under the loan are covered in a dragnet clause that includes the future advances and prevents a subsequent lien from taking priority over the loan advances Obligatory advances take precedence over intervening liens, but an optional advance (not required by the original loan agreement) would be junior to intervening liens if the lender had actual notice of the intervening liens.

Bankruptcy

Debtors frequently use bankruptcy to delay foreclosure. Filing of a bankruptcy petition stops the enforcement of any lien against the bankrupt's property (11 U.S.C. 362.a(4)). In a Unit 7 bankruptcy, the title to the bankrupt's nonexempt property would pass to a trustee. The creditor would have to either get the trustee to release the property (if the debtor had no equity) or bring a motion for release of the property from the automatic stay.

trustee's deed

Deed given by trustee to purchaser after a trustee's sale A trustee's deed is given to the highest bidder at a nonjudicial foreclosure sale on a deed of trust (See Unit 10) A trust deed is given by a borrower to a third party to hold in trust as security for a lender. It is covered in detail in Unit 10.

Acceleration upon default

Even when a note states that all payments on the note became due upon default, a borrower can cure a debt that becomes accelerated because of default of payment on the principal, interest, taxes, or insurance by paying the amount in arrears plus costs up to five days before sale under a trust deed power-of-sale foreclosure, or at any time before entry of a decree on a mortgage foreclosure by court action. Trustee or attorney fees are limited by statute

bait-and-switch advertising

Illegal practice of advertising where a seller will not sell an item at a price advertised or does not have the item to sell in order to bring in buyers for other items Truth in Lending Act (Regulation Z) Part of the federal Consumer Protection Act of 1968, the Truth in Lending Act (15 U.S.C. 1601 et seq.) provides a uniform manner of calculating and presenting the terms of consumer loans to enable borrowers to compare the annual percentage rates and finance costs. The acts application to real estate is to advertisements for residential property that is to be owner-occupied. The disclosures of the act do not apply if there are to be fewer than four payments. Use of the following terms (trigger terms) in the ad requires full disclosure - Monthly payment - Term of loan - Dollar amount of any finance charges - Down payment (if the seller is the creditor) The full disclosure includes the interest rate at an annual percentage rate (APR) , the down payment, the monthly payment, and the term of the loan. Advertising the APR by itself does not trigger full disclosure The law makes bait-and-switch advertising (advertising property that is not available or that the advertiser will not sell, in an attempt to switch prospects to other property) a federal offense. While all of the facts must be disclosed in a disclosure statement, the total dollar amount of finance charges need not be included for first mortgage or trust deeds or purchase money loans. The lender cannot charge for preparation of the disclosure statement. When a loan is for consumer credit secured by a borrower's residence, a rescission right applies until midnight of the third business day following the completion of the loan.The borrower can waive rescission rights if the loan is needed for a bona fide emergency. If the lender fails to provide required disclosures, the borrower has three years to rescind the loan

Impound accounts

Impound accounts are trust account reserves kept by the lender for advance payments made by the borrower for property taxes and insurance. The impound account protects the lender in that the funds will be available for the taxes and insurance when they are due. Impound accounts cannot be required for single-family residences unless: - they are required by state or federal law (such as FHA and VA loans) - the truster has failed to pay two consecutive tax payments -the loan is 90% or more of the property value or sales price, and the lender requires impounds. Civil Code Section 2954.1 prohibits excessively large impound accounts. The borrower cannot be required to deposit more than would be required in a federally related loan under the Real Estate Settlement Procedure Act (RESPA). The section also requires that any sum in excess monies reasonably necessary to pay obligations must be refunded to the borrower within 30 days, unless agreed otherwise. The lender also must make payments in such a manner that insurance is not canceled or property taxes are not allowed to become delinquent. RESPA (12 U.S. Code 2609) limits the amount of impound accounts for federally related lenders (lenders with Federal Deposit Insurance Corporation [FDIC] insurance). The accounts, when established, can be no more than the prorated taxes and insurance plus an estimated two months' advance charges. Impound accounts are required for FHA loans. Lenders on FHA loans can require a tax reserve of six months and an insurance reserve of one year. Impound accounts are not required on VA-guaranteed loans, although the lenders customarily require them. For impound accounts for one to four residential units, state-licensed lenders must pay interest of at least 2%.

per stirpes

Inheritance by right of representation. Children share equally in the share their deceased parent would have taken.

California Homeowners Bill of Rights

Intended to guarantee fairness and transparency for homeowners in the foreclosure process Effective in 2013, the California Homeowner Bill of Rights was intended to guarantee fairness and transparency for homeowners in the foreclosure process. Provisions include - prohibition against dual-track foreclosure. When a homeowner applies for a loan modification, the foreclosure process stops until the applications processed. - There must be a single point of contact for homeowners as to loan modification - Lenders who file unverified documents (rob-signing without reading or having personal knowledge of facts stated) are subject to $7,500 fine per loan, as well as action by licensing agencies - Lender violation of the foreclosure process is subject to injunctive relief, as well as damages after a sale. - The statute of limitations to prosecute mortgage-related crimes is extended from one year to three years. - To curb blight, local governments and receivers can allow time to cure code violations and can compel buyers of foreclosed property to pay for upkeep

Late charges

Late charges for a single family dwelling loan made after January 1, 1976, cannot exceed 10% of the installment due; however, a $5 minimum late charge is allowed. No late charge is allowed for payments less than 10 days late (Business and Professions Code Section 10242.5).

Lease options

Lease options could be subterfuges to avoid the due-on-sale clause, as well as keep the property from being reassessed for property taxes. The leases might have a large down payment (fee for option), high rent, and an option to buy at a very low purchase price at a particular time when the existing loan is almost paid off. The courts could be expected to regard such an arrangement as a sale that triggers the due-on-sale clause. In determining whether a lease option is really a sale, the courts will consider the option cost, purchase price, and rental arrangements. A disadvantage to the buyer on a lease option agreement is that rent for a residence is not a deductible expense, but interest on a loan as well as property taxes is deductible on personal income tax returns. Because a normal loan payment is mostly interest, the purchaser on an option could be giving up a great deal more than the benefits sought.

grant deed

Most common deed used in California to convey title. The grant deed warrants that the seller has not conveyed title previously and the grantor knows of nothing against the property that has not been disclosed. The deed used most commonly in California to transfer title, the grant deed, has two implied covenants: 1) That before the time of execution of such conveyance, the grantor has not conveyed the same estate or any right, title, or interest therein to any person other than the grantee. 2) That such estate is at the time of execution of the conveyance free from encumbrances done, made, or suffered by the grantor or any person claiming under the grantor (other than those declared) If one of the grantor's implied covenants in a grant deed is breached, the grantee will be entitled to either recession or damages. A grant deed customarily is used along with a policy of title insurance. Grants by grant deed are presumed to be in fee simple (Civil Code Section 1105). When a person purports to grant real property in fee simple and subsequently acquires any claim or title to the real property, the claim of title passes to the grantee or successors (Civil Code Section 1106). Grant deeds, therefore, convey after-acquired title as if the grant deed stated, "...and all interest that I may at any time hereafter acquire." For example, suppose a grantor executes a grant deed to a property the grantor thinks inherited from a distant relative. However, the relative is still alive! When the relative later dies and the grantor inherits title, the grantee would thereby receive after-acquired title.

Attorney fees

Notes frequently provide that the maker agrees to pay reasonable attorney fees if legal action becomes necessary for collection.

Deed in lieu of foreclosure

Often a mortgagee, instead of foreclosing, will have the mortgagor deed the property to the mortgagee. The mortgagee benefits by saving time and foreclosing costs, as well as by avoiding the mortgagor's rights of redemption. The mortgagor benefits by avoiding having the credit report show a foreclosure. Deeds in lieu of foreclosure often are given in exchange for cash or several months of free rent. A foreclosure of a prior lien will wipe out tenant leases entered into after the lien was created. When rents ,ay have declined on commercial property, creditors have been negotiating deeds in lieu of foreclosure to hold the tenant to leases that are advantageous to the lessor. While a foreclosure wipes out the tenancy, a deed merely transfers the lessor's interest. A deed in lieu of foreclosure should not be used without a title search. The mortgagee could end up getting the property back subject to a number if liens, such as recorded judgements against the mortgagor. These junior liens would have been eliminated by a foreclosure but now could be in a priority position and able to foreclose on the property. A grantee of a deed in lieu of foreclosure could be buying litigation. An anti merger clause in a mortgage provides that the senior lienholder will retain priority over junior liens in the event of a merger. Normally, a lien is extinguished by a merger when the lienholder acquires title. If there is an anti merger clause, a foreclosing junior lienholder will be paid only after the sale proceeds have satisfied the senior encumbrances. A deed in lieu of foreclosure that really was intended as a security device, giving the creditor greater security, rather than as a title transfer, will be considered invalid becasue it attempted to defeat the debtors statutory redemption rights. Some mortgages have sale provisions that provide for a nonjudicial sale in the event of default. These sales would be similar to the sale provision of trust deeds.

Nuncupative will

Oral, or nuncupative, wills are no longer valid California.

assignment of rent

Owner assigns right to collect rent to another. Usually given to a lienholder when owner is delinquent in loan payments Mortgages and trust deeds for income property often provide for an assignment of rent, which allows the mortgagee to take over the property during the redemption period and apply the rents received to the debt. Without this provision, the mortgagor would keep possession and would be collecting the rents.

executor

Party appointed by testator to administer their estate Probate is the legal procedure that provides for the transfer of the real and personal property of the deceased, as well as payment of the debts of the deceased. The person appointed under the will to serve as the personal representative of the deceased during probate is commonly referred to as the executor.

bequest

Personal property transferred by will

hypothecate

Pledge To use property as security for a loan without giving up possession While a promissory note is the evidence of debt, a security device, such as a mortgage or a trust deed, provides security for the note. Mortgages and trust deeds hypothecate, or pledge, the property (the borrower keeps possession but gives a security interest)

Fair Credit Reporting Act

Provides consumer rights as to knowledge of, and correction to, credit reports. The Fair Credit Reporting Act (15 U.S.C. 1681 et seq.) restricts credit reports to those with a legitimate need. It also provides that -investigative reports cannot be made unless they are disclosed to the consumers involved -consumers have the right to know the substance the material in their credit file, as well as the names of the recipients reports -consumers have the right to have disputed material investigated. -consumers can place a statement of explanation of a dispute in their file -consumers are entitled to a statement if the reason for adverse action regarding their credit

beneficiary statement

Statement by beneficiary as to balance due on loan Condition of Debt Borrowers are entitled to know the amount owed (beneficiary statement). Beneficiaries and mortgagees must provide this information within 21 days of request. Failure to do so can result in a $300 penalty plus damages. There can be a charge for this information, but the borrower must be given an annual statement without cost.

Independent Administration of Estates Act

The Independent Administration Act allows a private sale of property in probate without a court proceeding allowing later bids. The heirs must agree to this procedure, and court approvals required.

annual percentage yield (APY)

The Truth in Savings Act (12 U.S.C. 4301) is a disclosure act requiring that the term, fees, and interest yield on savings, checking, money market account, and certificates of deposit be revealed. Are checking cannot be used is there are any fees. The interest yield must be expressed as annual percentage yield (APY), which is based on a one-year deposit considering compound of interest.

Dodd-Frank Act

The act mandates the simplification of loan disclosures combined with truth and lending disclosures, as well as simplified closing statements. The Dodd-Frank Act (15 U.S.C. 1639b) mandated simplification of loan disclosures. The former good-faith estimate of closing costs has been combined with truth and lending disclosures. Dodd-Frank also provides for a simplified closing statement.

Due-on-encumbrance clause

The due-on-encumbrance clause accelerates the payments on a loan if the owner places a further encumbrance on the property. Civil Code Section 2949, however, prohibits such acceleration for single-family owner-occupied dwellings. For other than a single-family dwelling, a lender can accelerate payments only if the encumbrance endangers the lender's security. (This would be an unusual situation.)

government seizure

The government can seize property without compensation to the owners when the property was used with the owner's knowledge for unlawful acts, such as the sale, manufacture, or distribution of controlled substances, or was purchased with revenue derived from drug traffic. The Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) provides for the forfeiture to the United States of any real or personal property derived from proceeds traceable to violation of 18 U.S. Code Section 1014, which prohibits "knowingly making any false statement...for the purpose of influencing in any way the action of...any institution the accounts of which are insured by the Federal Deposit Insurance Corporation upon any application for a loan." Falsifying a loan application could, therefore, result in the forfeiture of the property securing the loan. The Fourth Amendment protects property owners against seizure without a notice and hearing.

probate

The legal procedure to carry out the wishes of the deceased and pay her debts Probate is the legal procedure that provides for the transfer of the real and personal property of the deceased, as well as payment of the debts of the deceased. The person appointed under the will to serve as the personal representative of the deceased during probate is commonly referred to as the executor. If the deceased died intestate (without a will) the court will appoint a personal representative (commonly referred to as an administrator) to represent the deceased. Upon a person's death, the person's property becomes immediately vested in the beneficiaries named in the will or the heirs of there is no will. Theoretically, they immediately could encumber or transfer their interests; however, title would not be insurable because the property would be subject to the control the deceased's representative until probate was concluded. Heirs and beneficiaries often will transfer their interests for consideration before completion of probate. Some people are in the business of buying the interests of heirs and beneficiaries. Real property is probated in the state where the property is located. Probates in the state where the deceased resided are domiciliary probates. Probates in other states are ancillary probates. In California, estates are probated in superior court in the county where the real property is located or the deceased resided. Probate starts with a petition for probate (if a will) or letters of administration (if intestate). A hearing is held, and a representative is appointed or confirmed. Creditors generally have four months from a publication of notice to file their claims. An inventory and appraisal are filed with the court clerk. The representative files an accounting of all receipts and disbursements and requests court approval. Finally, the representative petitions the court to distribute the remaining assets to the proper heirs and devisees. If a deceased had a pending contract for the sale of real property, the court would have to confirm the sale. When it is in the best interests of the estate, property may be sold in probate. Money may be needed to pay debts, taxes, costs, or simply to allow the division of assets among heirs or beneficiaries. California Law of Intestate Succession If there is a surviving spouse - one half already belongs to the surviving spouse - remaining one-half goes to surviving spouse after decedent's liabilities have been paid. Community property with right to survivorship If there is a surviving spouse, surviving spouse takes the entire property Separate property If there is a surviving spouse and no child - surviving spouse takes one half -surviving parent, brother or sister; or child of deceased brother or sister; or (if none of these) spouse takes one half If there is a surviving spouse and one child -Surviving spouse takes one half -Child takes one half If there is a surviving spouse and more than one child -Surviving spouse takes one third -Children divide two thirds equally If there is no surviving spouse or child -Property is distributed to next of kin in order prescribed by California law; if no heirs can be located, the property will escheat to the state. The representative of the estate can grant exclusive listing for a period not to exceed 90 days. Generally, sales by the representative if the deceased are subject to court approval. Bids usually would be taken to the court for an approval hearing. Late bids from other parties will be considered. However, for a late bid to be considered, it must be at least 10% higher on the first $10,000, and 5% higher on the balance if the bid being considered. For example, if the bid being considered were for $90,000, a late bid would have to be $5,000 higher 10% of $10,000 = $1,000 %5 of $80,000 = $4,000 $90,000 $5,000 (An easy way to remember the formula is 5% plus $500) The court can set increments for further bids and then confirm the sale. The Probate Code requires completion f the probate sale for the broker to earn a commission. Probate sales are one of the few instances where commissions are subject to court review. When probate court confirms the bid and there is no overbid in court, the listing agent receives all the sales commission. When there is no listing, but real estate agent procures an acceptable offer thats confirmed by the probate court, the agent receives all the sales commission (the rate is set by the court) If theres no agent on the original offer and there is an agent for the late bid, the agent's commission cannot exceed 50% of the difference between the original offer and the accepted offer. If an agent procures a bid that is overbid in probate court by a buyer represented by an agent, the two agents split the commission on the original amount, and the agent who obtains the overbid receives a;; the commission on the overbid amount, but is limited to 50% of the increased bid, with the court determining the commission rate. If the original offer was made through the listing agent and the overbid is made by a buyer not represented by an agent, the listing broker earns a commission not he amount of the original bid, with the court determining the commission rate.

police power

The power of the government to regulate use for health, safety, morals, and general welfare Eminent domain The condemning entity must compensate the owner for property taken. The power of eminent domain should not be confused with the exercise of police power. The exercise of police power to protect health, safety, morals, and general welfare generally cannot be delegated, and it does not entitle an owner to compensation. Examples of police power would be enforcement of zoning ordinances or fire, building, and health codes.

eminent domain

The power of the government to take private property for the public good. Consideration must be given for the property taken The power of the government to take private property for the public good is called eminent domain and it is set forth in the Fifth Amendment to the U.S. Constitution, as well as the California Constitution. Eminent domain may be exercised at any level of government. It may be delegated to schools, hospitals, and public utilities. The condemning entity must compensate the owner for property taken. The power of eminent domain should not be confused with the exercise of police power. The exercise of police power to protect health, safety, morals, and general welfare generally cannot be delegated, and it does not entitle an owner to compensation. Examples of police power would be enforcement of zoning ordinances or fire, building, and health codes. The owner is entitled to the fair market value of the property at the time it is taken. Any increase in value because of the use by the condemning entity is not considered determining value. An owner who is not satisfied with the compensation offered has the right to have the value determined by the court. In that event, a jury will determine market value as a question of fact. The condemnation award should be based on the highest and best use of the property, even if the property is being used for another purpose (Code of Civil Procedure Section 1250.410) Relocation expenses are allowed by statute in cases of eminent domain. Compensation also is allowed for goodwill of a business if the loss cannot be prevented by relocation. Tenants are entitled be compensated for their remaining leasehold interests unless the lease provides that it terminate upon condemnation. Every taking of property in fee or a lesser interest (easement) means that an owner is entitled to compensation for the value of the property interest taken. The taking for a street or a utility easement could result in a benefit to the remaining property, so that the owner would not be entitled to compensation for any detriment caused to the balance of the parcel. Even a property is not used for the purpose for which it was taken under eminent domain, the former owner has no right to reclaim the property.

reservation in a deed

The retention of a right, such as an easement, in the grantor Reservation in a deed A reservation in a deed gives the grantor a right that did not exist separately before the grant. For example, a grantor could reserve an easement over the property conveyed, retain a life estate, and retain oil and mineral rights, and so on. Not to be confused with Exception in a deed An exclusion of part of the property from a grant. Exception in a deed An exception withdraws part of the described property from the grant. For example, the grantor, after describing the deeded property, could except the south 20 feet from the grant. Exceptions in deeds often use the word "sans," which means "without"

ademption

The revocation of a specific property grant in a will by disposing of said property prior to death. Disposition of a property before a person's death revokes the portion of the will giving that property to a named beneficiary (i.e. ademption). for example, if a man's will gave a special property to his cousin, but he sold that property before his death, the divide to the cousin would be revoked. The proceeds from the sale would go to residual beneficiaries and not the cousin.

intestate succession

The succession of property to the heirs when the deceased dies without a will When a deceased leaves no will, the property passes to the deceased's heirs by the law of intestate succession. California Law of Intestate Succession If there is a surviving spouse - one half already belongs to the surviving spouse - remaining one-half goes to surviving spouse after decedent's liabilities have been paid. Community property with right to survivorship If there is a surviving spouse, surviving spouse takes the entire property Separate property If there is a surviving spouse and no child - surviving spouse takes one half -surviving parent, brother or sister; or child of deceased brother or sister; or (if none of these) spouse takes one half If there is a surviving spouse and one child -Surviving spouse takes one half -Child takes one half If there is a surviving spouse and more than one child -Surviving spouse takes one third -Children divide two thirds equally If there is no surviving spouse or child -Property is distributed to next of kin in order prescribed by California law; if no heirs can be located, the property will escheat to the state. The representative of the estate can grant exclusive listing for a period not to exceed 90 days. Generally, sales by the representative if the deceased are subject to court approval. Bids usually would be taken to the court for an approval hearing. Late bids from other parties will be considered. However, for a late bid to be considered, it must be at least 10% higher on the first $10,000, and 5% higher on the balance if the bid being considered. For example, if the bid being considered were for $90,000, a late bid would have to be $5,000 higher 10% of $10,000 = $1,000 %5 of $80,000 = $4,000 $90,000 $5,000 (An easy way to remember the formula is 5% plus $500) The court can set increments for further bids and then confirm the sale. The Probate Code requires completion f the probate sale for the broker to earn a commission. Probate sales are one of the few instances where commissions are subject to court review. When probate court confirms the bid and there is no overbid in court, the listing agent receives all the sales commission. When there is no listing, but real estate agent procures an acceptable offer thats confirmed by the probate court, the agent receives all the sales commission (the rate is set by the court) If theres no agent on the original offer and there is an agent for the late bid, the agent's commission cannot exceed 50% of the difference between the original offer and the accepted offer. If an agent procures a bid that is overbid in probate court by a buyer represented by an agent, the two agents split the commission on the original amount, and the agent who obtains the overbid receives a;; the commission on the overbid amount, but is limited to 50% of the increased bid, with the court determining the commission rate. If the original offer was made through the listing agent and the overbid is made by a buyer not represented by an agent, the listing broker earns a commission not he amount of the original bid, with the court determining the commission rate.

devise

The transfer of real property by will testate succession A will is a testamentary declaration about the disposition of a person's property, to take effect upon the maker's death. A will is said to be an ambulatory instrument because it can be changed anytime before the maker's death. The maker of a will is a testator (trix, formerly added as a suffix to designate a woman, is not used in this book) Anyone 18 or older and of sound mind may make a will. The testator must understand the nature of the testator's property and the disposition of th property. A later valid will that makes a complete disposition of the property if the testator in a manner different from an earlier will serves to revoke the earlier will. A codicil, and amendment to a will, requires the same formalities as a will. A devise is a transfer of real property by will. A bequest is a transfer of personal property. Legacy refers to money

dedication

The transfer of real property to a public entity without consideration A dedication is a donation of land for public use. Because it is a donation, the donor receives no consideration. A person cannot dedicate more than that person owns. One co-tenant cannot dedicate land to public use without the consent of the co-tenants. To obtain Subdivision Map Act approval (local control over subdivisions), subdivision might donate land for streets, bike paths, parks, schools, et cetera, in fee as well as in easement rights. Dedication may be accomplished through a grant deed or by recording a subdivision map showing the publicly owned areas, which would be implied dedication. A deed dedicating property to a governmental body must be accepted by the governmental body. If a property is given for a particular purpose only, the dedication should state clearly that the property reverts to the grantor if the use ceases or is abandoned. Otherwise, courts likely would determine it really was given for any public purpose. Formerly, if an owner knew that a government entity was using the owner's private property by spending public funds on improvements, clearing, or performing maintenance related to the public for five years, an implied dedication of the property could result. In response, the state legislature enacted Civil Code Section 1009, which states that future public use of private property may not ripen into public use by implied dedication. Dedication cannot be required as a condition of obtaining a building permit where the purpose of the use of the dedicated land does not relate to the new structure.

after-acquired title

Title or interest acquired by the grantor after property has been conveyed. Grants by grant deed are presumed to be in fee simple (Civil Code Section 1105). When a person purports to grant real property in fee simple and subsequently acquires any claim or title to the real property, the claim of title passes to the grantee or successors (Civil Code Section 1106). Grant deeds, therefore, convey after-acquired title as if the grant deed stated, "...and all interest that I may at any time hereafter acquire." For example, suppose a grantor executes a grant deed to a property the grantor thinks inherited from a distant relative. However, the relative is still alive! When the relative later dies and the grantor inherits title, the grantee would thereby receive after-acquired title.

Transfers of real property upon death

Upon an owner's death, the owner's property can be transferred voluntarily to the heirs - by will- or involuntarily by the laws of intestate succession to relatives, or by escheat to the state.

simultaneous death

When parties die in the same accident and it is unclear which one died first, they are presumed to have died at the same time. Each estate will be probated as if that person had survived the other. When spouses die in a common disaster, simultaneous death, and there is insufficient evidence to conclude thane spouse survived the other, the estate of each spouse will be distributed as though each had survived the other (Uniform Simultaneous Death Act, California Probate Code Sections 220-230). For this reason, joint tenant property owners should each have wills.

holographic will

a will that is handwritten and signed by the testator (Probate Code Section 6111) A holographic will is hand written by the testator. For such a will to be valid, the material provisions must be in the handwriting of the testator, and it must be signed by the testator, but neither witnesses nor a date is required. A letter could meet the requirements if a valid holographic will if it were handwritten with testamentary intent.

(9) 12. A grantor retained an easement over conveyed land. What is this called? a. A reservation b. An exception c. A codicil d. An after-acquired interest

a. A reservation The retention of a right, such as an easement, in the grantor Reservation in a deed A reservation in a deed gives the grantor a right that did not exist separately before the grant. For example, a grantor could reserve an easement over the property conveyed, retain a life estate, and retain oil and mineral rights, and so on.

(9) 2. Title transfers with a deed at the time of a. delivery b. signing c. acknowledgement d. recording

a. delivery DATED - A deed need not be dated. The deed takes effect on delivery. A mistake in the date on the deed does not affect its validity. However, the date of a deed could be important in the case of a conflicting claim. Void and voidable deeds A void deed transfers no interest whatsoever, even if a purchaser paid value and acted in good faith. The following would make a deed void: -Forgery -Alteration -The fact that the grantor is a minor - The fact that the grantor has been declared insane or is entirely without understanding -Failure of delivery DELIVERY- To transfer title, a deed must be delivered. The most important element of delivery is the intent of the grantor. The grantor must intend to transfer title irrevocably to the grantee or a trustee and to divest the grantor title immediately. The grantor's intent can be determined by words or acts before, at the time of, and after execution of the deed. In an actual delivery, the grantee received the deed. Although an agreement for a future transfer of title is not a delivery, a legal delivery is possible, even if the grantee's right to possession and enjoyment of the property are to accrue at a future date. For example, a deed could be given in an irrevocable trust to be given to a grantee at a later date. The delivery of a deed to third party where the grantor cannot get the property back is considered a constructive delivery. Recording the deed creates a presumption that the deed was delivered. A deed also is presumed to have been delivered if it is in possession of the grantee. However, if the grantor is in possession of the deed, it is presumed it is presumed not to have been delivered. These presumptions can be overcome by evidence to the contrary, and legal delivery can remade even if the deed was not physically transferred. A deed to more than one grantee need be delivered to only one of them for effective delivery. Delivery must be absolute; it cannot be conditional. For example, assume a deed is given to a third party to hold with the provision that it should be returned to the grantor's son upon the grantor's death but it should be returned to the grantor upon the grantor's request. In that case, title would not pass because the transfer was conditioned on the grantor's not voiding it before death. See Stone v. Daily (1919) 181 C. 571

(9) 13. In obtaining title by adverse possession, it is NOT necessary to a. live on the property b. actually pay taxes c. have an open and notorious occupation d. have occupation that is not hostile to the interest of the owner.

a. live on the property -The possession must be an actual occupation. A person need not actually live on the property to get title by adverse possession. The person must, however, use or fence the property. Title cannot be claimed for more that what a person exercises dominion over, except when a person claims title under a defective deed. Title to all the property described in the deed could be obtained under adverse possession, even if all of the property were not used. There also must be exclusive use. If another adverse user or the owner is also in possession, an adverse user cannot gain title by adverse possession.

(9) 23. A woman died intestate, leaving one living son and two grandchildren (by a deceased daughter) as her only living relatives. The disposition of her property would be a. one half to her son and one quarter each to her grandchildren b. one third to her son, and one third to each grandchild c. to the state by escheat d. none of these

a. one half to her son and one quarter each to her grandchildren If there is a surviving spouse and no child - surviving spouse takes one half -surviving parent, brother or sister; or child of deceased brother or sister; or (if none of these) spouse takes one half California Law of Intestate Succession If there is a surviving spouse - one half already belongs to the surviving spouse - remaining one-half goes to surviving spouse after decedent's liabilities have been paid. Community property with right to survivorship If there is a surviving spouse, surviving spouse takes the entire property Separate property If there is a surviving spouse and no child - surviving spouse takes one half -surviving parent, brother or sister; or child of deceased brother or sister; or (if none of these) spouse takes one half If there is a surviving spouse and one child -Surviving spouse takes one half -Child takes one half If there is a surviving spouse and more than one child -Surviving spouse takes one third -Children divide two thirds equally If there is no surviving spouse or child -Property is distributed to next of kin in order prescribed by California law; if no heirs can be located, the property will escheat to the state.

(9) 1. After a deed was signed by the grantor, the grantee made a slight unauthorized alteration that increased the size of the property conveyed from 600 acres to 620 acres. The effect of this modification was that a. the entire deed became void b. only 600 acres would be transferred, but the grantee could be liable for damages c. 620 acres were transferred, but the grantee could be liable for damages d. the grantor has one year to discover the forgery and void the transfer

a. the entire deed became void A forged deed is void and transfers no interest. A deed containing unauthorized alterations also is void. A criminal court can void false or forged deeds without the necessity of quiet title action.

(9) 3. The MOST important factor in the delivery of a deed is a. the intent of the grantor b. physical conveyance c. possession d. recording

a. the intent of the grantor DELIVERY- To transfer title, a deed must be delivered. The most important element of delivery is the intent of the grantor. The grantor must intend to transfer title irrevocably to the grantee or a trustee and to divest the grantor title immediately. The grantor's intent can be determined by words or acts before, at the time of, and after execution of the deed. In an actual delivery, the grantee received the deed.

codicil

an amendment to a will requiring the same formalities of the will testate succession A will is a testamentary declaration about the disposition of a person's property, to take effect upon the maker's death. A will is said to be an ambulatory instrument because it cane changed anytime before the maker's death. The maker of a will is a testator (trix, formerly added as a suffix to designate a woman, is not used in this book) Anyone 18 or older and of sound mind may make a will. The testator must understand the nature of the testator's property and the disposition of th property. A later valid will that makes a complete disposition of the property if the testator in a manner different from an earlier will serves to revoke the earlier will. A codicil, and amendment to a will, requires the same formalities as a will. A DEVISE is a transfer of REAL PROPERTY by will. A BEQUEST is a transfer of PERSONAL PROPERTY. LEGACY refers to MONEY

(9) 20. Which is a requirement of a holographic will? a. Verbal dispostion b. Handwritten c. Witnesses d. Dated

b. Handwritten a will that is handwritten and signed by the testator (Probate Code Section 6111) A holographic will is hand written by the testator. For such a will to be valid, the material provisions must be in the handwriting of the testator, and it must be signed by the testator, but neither witnesses nor a date is required. A letter could meet the requirements if a valid holographic will if it were handwritten with testamentary intent.

(9) 9. Which is a characteristic of a quitclaim deed? a. It conveys after-acquired interests b. It can convey a partial interest c. It warrants that the grantor has not previously conveyed the property d. It warrants that there is nothing against the property that the grantor knows about that has not been disclosed

b. It can convey a partial interest A deed that conveys whatever interest the grantor has without claiming any specific interest A grantor under a quitclaim deed transfers only the interest that the grantor has and makes no warranties of title. If the grantor has fee simple title, then that is the title conveyed. If the grantor has only a life estate, then only the life estate will be conveyed. Quitclaim deeds often are used to clear title from grantors who have possible or disputed interest.

(9) 4. After a man's death, a deed giving his home to a nephew is discovered in the same envelope as his will. The will, dated before the deed, gave the house to his church. Who gets the house? a. The church, because the will was dated before the deed b. The church, because the deed was never delivered c. The nephew, because the deed was dated later and thus modified the will d. The nephew, because deeds have priority over wills

b. The church, because the deed was never delivered DATED - A deed need not be dated. The deed takes effect on delivery. A mistake in the date on the deed does not affect its validity. However, the date of a deed could be important in the case of a conflicting claim. Void and voidable deeds A void deed transfers no interest whatsoever, even if a purchaser paid value and acted in good faith. The following would make a deed void: -Forgery -Alteration -The fact that the grantor is a minor - The fact that the grantor has been declared insane or is entirely without understanding -Failure of delivery

(9) 19. Alex's inheritance of a house from his uncle George would be called a a. bequest b. devise c. legacy d. dedication

b. devise A devise is a transfer of real property by will. A bequest is a transfer of personal property. Legacy refers to money

(9) 6. Acknowledgement is necessary to a. deliver a deed b. validate a deed for recording c. have a formal will d. convey a legal title

b. validate a deed for recording ACKNOWLEDGEMENT- Acknowledgement is made by a grantor before a notary public or another authorized person. The grantor acknowledges that the signing of the deed is the grantor's own free act. The notary has a duty to determine the identity of the person executing the document. The notary and the notary's sureties would be liable for negligence in ascertaining the identity of the person signing. A deed need not be acknowledged to be a valid transfer, but without acknowledgement, the deed will not be accepted for recording. California notaries must now obtain the right thumbprint of the grantor of any deed in their record books.

(9) 25. The executor brought a bid of $190,000 to the probate court for approval. The court will NOT consider late bids less than a. $190,001 b. $191,000 c. $200,000 d. $209,000

c. $200,000 10% of $10,000 = $1000 5% of $180,000 = $9,000 = $10,000 $190,000 + $10,000 = $200,000 Bids usually would be taken to the court for an approval hearing. Late bids from other parties will be considered. However, for a late bid to be considered, it must be at least 10% higher on the first $10,000, and 5% higher on the balance if the bid being considered. For example, if the bid being considered were for $90,000, a late bid would have to be $5,000 higher 10% of $10,000 = $1,000 %5 of $80,000 = $4,000 $90,000 $5,000 (An easy way to remember the formula is 5% plus $500) The court can set increments for further bids and then confirm the sale.

(9) 5. Which deeds would FAIL to transfer title? a. A deed to John Jones using his stage name "Mr. Marvelous" b. A deed made to Henry Schmidt and wife c. A deed made to Henry or Henrietta Schmidt d. A deed to Tom Brown, an emancipated minor

c. A deed made to Henry or Henrietta Schmidt GRANTING CLAUSE- While particular wording is not required, the language of the deed must clearly indicate a transfer of title.

(9) 15. Able's property was taken by the city for a new civic center. Baker was Able's tenant in the property and had five years remaining on an advantageous lease. Which statement is TRUE of Baker's rights? a. Baker's only right is a 30 day notification b. Baker has rights against Able for the value of his lease interest c. Baker has rights against the city for the value of his lease interest d. Both b and c are true of Baker's rights

c. Baker has rights against the city for the value of his lease interest Tenants are entitled be compensated for their remaining leasehold interests unless the lease provides that it terminate upon condemnation.

(9) 17. An owner's property was seized because it was used for drug sales. Which statement is correct? a. The owner is entitled to the fair market value of the property b. If the owner is not found guilty of a felony, the property must be returned. c. Innocence of any knowledge of the use would be a defense against seizure d. None these statements is correct

c. Innocence of any knowledge of the use would be a defense against seizure The government can seize property without compensation to the owners when the property was used with the owner's knowledge for unlawful acts, such as the sale, manufacture, or distribution of controlled substances, or was purchased with revenue derived from drug traffic. The Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) provides for the forfeiture to the United States of any real or personal property derived from proceeds traceable to violation of 18 U.S. Code Section 1014, which prohibits "knowingly making any false statement...for the purpose of influencing in any way the action of...any institution the accounts of which are insured by the Federal Deposit Insurance Corporation upon any application for a loan." Falsifying a loan application could, therefore, result in the forfeiture of the property securing the loan. The Fourth Amendment protects property owners against seizure without a notice and hearing.

(9) 10. What type of deed is received by a purchaser after a sheriff's sale? a. Limited warranty deed b. Quitclaim deed c. Sheriff's deed d. Grant deed

c. Sheriff's deed A deed given after a sheriff's sale A sheriff's deed is given at execution of a judgement under a sheriff's sale. It transfers only the former owner's interest and contains no warranties (see Unit 10)

(9) 14. Tacking on refers to a. an additional party to an agreement b. additionally acquired security c. adverse use of a previous or subsequent user d. none of these

c. adverse use of a previous or subsequent user Allowing successors in interest to add on their adverse use in obtaining the five years necessary for an easement by prescription or title by adverse possession. Adverse possession - Possession must be continuous and uninterrupted for a period of five years. The five year period is satisfied if an adverse user uses the property for two years and a successor in interest to the adverse user uses the property for an additional three years (tacking on). For tacking on, there must be some sort of privity (mutual or successive relationship) between two users. While the use does not have to occur every day, it must be of a continuous nature. If the use is interrupted, a new five year period will start.

(9) 16. Loss of value of remaining land caused by taking under eminent domain is known as a. inverse condemnation b. the police power state c. severance damage d. exemplary damage

c. severance damage if taking of property results in a lower value to the remaining property that has not been taken, the owner will be entitled to severance damage (Code of Civil Procedure Section 1240.150)

(9) 11. When you receive and record a gift deed, which could adversely affect your title? a. Creditors of the grantor b. Rights of parties in possession c. Prior unrecorded deeds given for valuable consideration d. All of these

d. All of these A deed given for love and affection Any deed where no valuable consideration was given is considered a gift deed. The deed is valid unless it was given to defraud creditors, in which case it can be voided.

(9) 7. Which is (are) characteristic(s) of a recorded deed? a. It must be acknowledged b. It is presumed to have been delivered c. It provides constructive knowledge of the transfer d. All of these are characteristics of a recorded deed

d. All of these are characteristics of a recorded deed RECORDING- Between the parties, an unrecorded deed can convey good title. However, an unrecorded deed does not give CONSTRUCTIVE NOTICE to the world of the grantees interest. Besides ACKNOWLEDGMENT, a deed to be recorded must contain the name and address to which future tax statements are to be sent. The recorder also will require that the documentary transfer tax be paid before recording. The county tax accessor requires filing a Change of Ownership form. Recording the deed creates a presumption that the deed was DELIVERED. A deed also is presumed to have been delivered if it is in possession of the grantee. However, if the grantor is in possession of the deed, it is presumed it is presumed not to have been delivered. These presumptions can be overcome by evidence to the contrary, and legal delivery can remade even if the deed was not physically transferred.

(9) 8. Which requirement is a valid deed? a. Acknowledgement b. Dated c. Witness d. None of these

d. None of these REQUIREMENTS OF A DEED WRITTEN EXECUTION DESCRIPTION DELIVERY ACCEPTANCE GRANTING CLAUSE COMPETENT PARTIES GRANTEE NOT REQUIRED FOR DEEDS ACKNOWLEDGEMENT- Acknowledgement is made by a grantor before a notary public or another authorized person. The grantor acknowledges that the signing of the deed is the grantor's own free act. The notary has a duty to determine the identity of the person executing the document. The notary and the notary's sureties would be liable for negligence in ascertaining the identity of the person signing. A deed need not be acknowledged to be a valid transfer, but without acknowledgement, the deed will not be accepted for recording. California notaries must now obtain the right thumbprint of the grantor of any deed in their record books. RECORDING- Between the parties, an unrecorded deed can convey good title. However, an unrecorded deed does not give constructive notice to the world of the grantees interest. Besides acknowledgement, a deed to be recorded must contain the name and address to which future tax statements are to be sent. The recorder also will require that the documentary transfer tax be paid before recording. The county tax accessor requires filing a Change of Ownership form. CONSIDERATION - While a promise to give a deed would require consideration in order to be enforceable, a deed is not a contract. It is a completed transfer, and consideration generally is not required. However, consideration is required for deeds by personal representatives (executors, guardians, attorneys-in-fact, etc. If a deed is given without consideration or for inadequate consideration while the grantor is insolvent, creditors of the grantor or a trustee in bankruptcy might be able to reach the property because the transfer would have constituted fraud against the creditors. While the courts ordinarily are not concerned with the adequacy of consideration, inadequate consideration would be admissible to show fraud or undue influence. The recording of a deed given without consideration would not give the grantee priority over prior unrecorded conveyances and encumbrances for value. The conveyance of a deed given on the promise of later consideration will remain valid, even in the event of failure to give the consideration. MANNER OF TAKING TITLE - The deed need not indicate how title is being taken. If the grantee is a single individual, the grantee would take title in severalty. In the case of more than one grantee, it would be presumed that they are taking the title as tenants in common. An exception to this is that deeds to both spouses in a marriage that do not indicate how title is to be taken pass the title as community property. WITNESSES AND SEALS - In California, deeds need not be witnessed (unless they are signed with an X), nor are seals required. As for other documents, the presence a seal on a corporate deed creates the presumption that the person signing had corporate authority. Revocable transfer on death deed This deed does not affect possession or ownership while the owner is alive. If not revoked by the owner, it transfers title to the beneficiary upon the owner's death without necessity of probate. Void and voidable deeds A void deed transfers no interest whatsoever, even if a purchaser paid value and acted in good faith. The following would make a deed void: -Forgery -Alteration -The fact that the grantor is a minor - The fact that the grantor has been declared insane or is entirely without understanding -Failure of delivery Voidable deeds are valid deeds unless or until they are voided. The following would allow a deed to be voided: -Fraud -Undue influence -Duress or menace -The grantor's not being of sound mind (but not declared insane or entirely without understanding) The statute of limitations to challenge a void or voidable deed is 5 years, 20 years if the claimant is a minor or insane (Civil Codes Sections 318, 319, and 328).

(9) 21. Agnes sold her house and purchased stocks and bonds with the proceeds. Upon her death, a will was found giving her house to her best friend, Mildred. What is Mildred entitled to? a. The stocks and bonds b. The value of the house at the time Agnes died c. The price Agnes received for the house d. Nothing

d. Nothing Ademption The revocation of a specific property grant in a will by disposing of said property prior to death. Disposition of a property before a person's death revokes the portion of the will giving that property to a named beneficiary (i.e. ademption). for example, if a man's will gave a special property to his cousin, but he sold that property before his death, the divide to the cousin would be revoked. The proceeds from the sale would go to residual beneficiaries and not the cousin.

(9) 18. A codicil providing for a transfer of real property is a(n) a. type of deed b. amendment to a deed c. original government transfer d. amendment to a will

d. amendment to a will an amendment to a will requiring the same formalities of the will testate succession A will is a testamentary declaration about the disposition of a person's property, to take effect upon the maker's death. A will is said to be an ambulatory instrument because it cane changed anytime before the maker's death. The maker of a will is a testator (trix, formerly added as a suffix to designate a woman, is not used in this book) Anyone 18 or older and of sound mind may make a will. The testator must understand the nature of the testator's property and the disposition of th property. A later valid will that makes a complete disposition of the property if the testator in a manner different from an earlier will serves to revoke the earlier will. A codicil, and amendment to a will, requires the same formalities as a will. A devise is a transfer of real property by will. A bequest is a transfer of personal property. Legacy refers to money

(9) 22. Alice and Jack, a married couple, hold all their property as community property. When Alice dies intestate, each of the couple's five children will receive a. one fifth of her property b. one fifth of two thirds of her property c. one tenth of her property d. nothing

d. nothing MANNER OF TAKING TITLE - The deed need not indicate how title is being taken. If the grantee is a single individual, the grantee would take title in severalty. In the case of more than one grantee, it would be presumed that they are taking the title as tenants in common. An exception to this is that deeds to both spouses in a marriage that do not indicate how title is to be taken pass the title as community property.

(9) 24. A will provided that all of an unmarried testator's estate would go to his only child. His child predeceased the testator, but the child left a spouse and three children. The estate would a. escheat to the state b. pass one third to the spouse and two thirds to the grandchildren c. pass one half to the spouse, and one half to the grandchildren d. pass one third each to the grandchildren

d. pass one third each to the grandchildren

valid will

testate succession A will is a testamentary declaration about the disposition of a person's property, to take effect upon the maker's death. A will is said to be an ambulatory instrument because it cane changed anytime before the maker's death. The maker of a will is a testator (trix, formerly added as a suffix to designate a woman, is not used in this book) Anyone 18 or older and of sound mind may make a will. The testator must understand the nature of the testator's property and the disposition of th property. A later valid will that makes a complete disposition of the property if the testator in a manner different from an earlier will serves to revoke the earlier will. A codicil, and amendment to a will, requires the same formalities as a will. A devise is a transfer of real property by will. A bequest is a transfer of personal property. Legacy refers to money

Proposition 99

(Homeowner and Private Property Protection Act) prohibits the taking of private property by eminent domain when the intention is to turn the property over to a private party rather than take it for public use. Prohibits the taking of an owner-occupied residence by eminent domain when the intention is to turn the property over to a private party rather than takeout for public use. Private parties can obtain an easement for utility services over the land of others by eminent domain provided -there is great necessity for the the easement -the easement location provides the most reasonable service and us consistent with the least damage to the burdened property -the hardship of the owner of the appurtenant property, if the taking is not permitted, clearly outweighs any hardship to the owner of the burdened property (Civil Code Section 1001(c))

severance damage

- if taking of property results in a lower value to the remaining property that has not been taken, the owner will be entitled to severance damage (Code of Civil Procedure Section 1240.150)