real estate chapter 6 - ownership of real property
By California statute, a joint tenancy may be created:
By transfer from a sole owner to himself or herself and others as joint tenants. By transfer from tenants in common to themselves or to themselves, or any of them, and others as joint tenants. By transfer from joint tenants to themselves, or any of them, and others as joint tenants. By transfer from a husband and wife (when holding title as community property or otherwise) to themselves, or to themselves and others, or to one of them and to another or others as joint tenants. By transfer to executors of an estate or trustees of a trust as joint tenants.
if asked by a consumer-- "How should I take title to my property?"-- you may discuss what you've learned here with him/her but
HOWEVER, you should NEVER advise a client or other consumer as to how he/she should hold a title. That is another example of acting in the capacity of an attorney (giving legal advice) without being licensed as an attorney. Your best advice will be to direct consumers to their attorneys to determine the best option for how they should take title(s) to property.
A formal, or declared homestead declaration must follow certain regulations, or it will be considered void, and then the automatic dwelling exception will usually apply. The formal homestead declaration must include the following:
It must be recorded to be valid, and must show that the claimant is head of the family (if applicable) or, in the case of a husband and wife who each owns an interest in the dwelling, then husband and wife both may be named as declared homestead owners in the same homestead declaration, OR, any person who is the guardian or conservator of the person or estate of either the husband or wife; A description of the declared homestead, which may include anything from a multiple-family dwelling, condo, or cooperative, to a mobile home, community apartment project, or yacht; AND A statement that the declared homestead is the principal dwelling of the declared homestead owner or such person's spouse, and that the declared homestead owner or such person's spouse resides in the declared homestead on the date the homestead declaration is recorded.
Remember that if the deed does not clearly STATE that the ownership situation is joint tenancy, then joint tenancy DOES NOT EXIST.
Joint tenancy can NEVER BE WILLED. If one of the parties in joint tenancy dies, then the property is automatically transferred to be split evenly with the surviving parties. In California, the appellate courts have accepted and enforced the common law rule that if any one of the four unities - time, title, interest or possession - is lacking, a tenancy in common, not a joint tenancy, exists. Upon the death of one of the joint tenants, the joint tenancy is terminated. A joint tenant may sever the joint tenancy as to his or her own interest either by a conveyance to a third party, or to a co-tenant. If there are three or more joint tenants, the joint tenancy is severed as to the interest conveyed, but continues between the other joint tenants as to the remaining interests. Since a corporation could, arguably, go on forever, corporations are not permitted to enter into joint tenancies.
what are some examples of encumbrance
Liens Easements Encroachments Deed Restrictions Licenses
The mechanic's lien must be based on a valid contract, EITHER written or verbal, between the claimant and owner (or owner's general contractor). called
Preliminary 20-Day Notice
what is a fee tail
Property is only inheritable by a monarch - by the "heirs of the body." This is always the wrong answer on the test, because it is not legal in the United States!
In order to have a joint tenancy and the right of survivorship, the following four unities must take place. This is known as "Unity of Ownership," or "fourfold unity." The unities are:
TIME - All owners must take title at the same time. TITLE - One deed transferred property from the grantor (seller) to the grantee (buyer). Remember that only the grantor signs a deed to transfer property. INTEREST - Each must have equal interest. There cannot be unequal interests in a Joint Tenancy. POSSESSION - Undivided interest in the whole property as in Tenants in Common. (This is something that Tenants in Common and Joint Tenants have in common.)
An owner may have only ONE homestead exemption at a time. For the automatic dwelling exemption, there need not be any previous filing. The requirements for the automatic dwelling exemption are simply that:
The home must be the principal residence of the party; and The debtor/homeowner must appear in court and claim the Dwelling House Exemption.
what are the two types of encumbrance AFFECTS ON TITLE
by either money owed (liens), OR by items that affect the PHYSICAL USE of the property (non-money)
what is voluntary estate referred as
conventional life estate
what is the main purpose of the california homestead exemption
is to protect a homeowner's equity in his personal residence from a forced sale by certain types of creditors
what is limited partnership
there are one or more general partners and limited partners, but the limited partners do not share any of the management duties. In a limited partnership, a limited partner's losses are limited to the amount of his investment
what does the grantor(Seller) decides
they decide what type of estate is transferred but the grantee(buyer) decides how to take title to an estate
The California Code of Civil Procedure 704.730 states the following.
(a) The amount of the homestead exemption is one of the following: (1) Seventy-five thousand dollars ($75,000) unless the judgment debtor or spouse of the judgment debtor who resides in the homestead is a person described in paragraph (2) or (3). (2) One hundred thousand dollars ($100,000) if the judgment debtor or spouse of the judgment debtor who resides in the homestead is at the time of the attempted sale of the homestead a member of a family unit, and there is at least one member of the family unit who owns no interest in the homestead or whose only interest in the homestead is a community property interest with the judgment debtor. 3) One hundred seventy-five thousand dollars ($175,000) if the judgment debtor or spouse of the judgment debtor who resides in the homestead is at the time of the attempted sale of the homestead any one of the following: (A) A person 65 years of age or older. (B) A person physically or mentally disabled who as a result of that disability is unable to engage in substantial gainful employment... (C) A person 55 years of age or older with a gross annual income of not more than twenty-five thousand dollars ($25,000) or, if the judgment debtor is married, a gross annual income, including the gross annual income of the judgment debtor's spouse, of not more than thirty-five thousand dollars ($35,000) and the sale is an involuntary sale." The law also says that unless otherwise stated in this section, the combined homestead exemptions of spouses on the same judgment shall not exceed the amount specified in paragraph (2) or (3), whichever is applicable, of subdivision (a), regardless of whether the spouses are jointly obligated on the judgment and regardless of whether the homestead consists of community or separate property or both.
The California courts, to attempt to clarify this issue, have established the rule that the true intention of husband and wife as to the status of their property should prevail over the record title. The following regulations apply to community property in California:
- BOTH husband and wife must sign all documents that transfer community real property. If one party, known as the "injured party," does NOT sign, then that party has the option to void the sale within ONE year. - BOTH signatures are required when selling, borrowing, or leasing community property for more than one year. - BOTH husband and wife share EQUALLY the right to manage and control the community property. This also means that each party may will his or her half of that property to whomever he or she chooses. (In such a case, the heir and the surviving spouse would be considered "tenants in common.") However, if there is not a will to state the decedent's wishes, if that person dies intestate (without a will), then his or her half automatically goes to the surviving spouse. - Community property is liable for the debts of either spouse contracted during the marriage and for a debt contracted prior to marriage except for that portion of the community property comprised of the earnings of the other spouse.
more example and explanation on tenant in common
- Individual interests in group ownership. If there isn't another agreement, then the owners will share an equal interest in the property. - Interests MAY be unequal or equal. One person can own a larger share of the property than another. - Undivided interest in the property. (Can't divide up the house or the property.) All owners have an interest (based on percentage of ownership) in the whole property. - There is a unity of possession in tenancy in common, which means that each owner has a right to possession and none can exclude the others nor claim any specific portion for himself alone. - No tenant in common can be charged rent for the use of the land unless otherwise agreed to by all the co-tenants. - One of the owners CAN sell one's interest WITHOUT getting approval of other owners. - Inheritable - Passes to heirs, not to other partners.
what is the fee simple defeasible
- fee simple conditional -an estate that dictates, "on the condition that..." -an estate that provides the "right to re-enter"
Remember that ALL LIENS are encumbrances, but NOT ALL ENCUMBRANCES are liens. what are the types of liens
-Mechanic's Lien -Materialman's Lien -Mortgage Lien -Income Tax Lien -Judgment Lien -Equitable Liens -A Blanket Encumbrance
what is the fee simple absolute
-highest degree of ownership - has unlimited duration - is inheritable - is subject to only the government powers
estate remainder is simijlar to an esate in rversion, in that the grantor separates his bundle of rights into two parts. however, in this case:
-life estate is deeded to a life tenant remainder estates is given to a third party who is known as the remainder-man aka: grantor -> life tenant -> death of life tenant -> grantor
what are the few additional liens
-tax lien -special assessment -attachment -judgement
What is a remainderman?
-the 3rd party who receives property after the life estate ends
in either reversion or remainder a life tenant owns an incomplete bundle of rights! they cannot:
-will -waste
It is not possible to sell the property without the consent of the partner, or to own property in one name only. The three types of legal life estates are:
1.) Dower - a wife's interest in the husband's property 2.) Curtesy - a husband's interest in a wife's property 3.) Homestead - protection against unsecured debts for the party who did not sign for the loan. We will discuss California law regarding these types of legal life estates near the end of this chapter.
The encumbrances that affect physical use are:
1.) Easements 2.) Building Restrictions and Zoning 3.) Encroachments 4.) Leases (which we'll discuss in Chapter 10)
The law explains that the following situations must occur to equal "completion":
1.) The owner occupies the property and the work stops; 2.) The owner accepts that the work is finished and files a Notice of Completion; 3.) Work on the project ceases for a continuous 60-day period; or 4.) Work on the project ceases for a period of 30 days or more, and the owner files a Notice of Cessation.
what are the types of leasehold estates
1.) estate for years 2.) estate for period 3.) estate at will 4.) estate at sufferance
under section 761 of the california civil code enacted in 1872, estates in real property are classified, with respect duration as....
1.) estates of inheritance or perpetual estates 2.)estates for life 3.) estates for years 4.) estates at will
what are some types of free hold estates
1.) free simple 2.) fee defeasible 3.) life estate 4.) fee tail
An easement can be created several ways. The most common of these are as follows:
1.) implication 2.) resevation 3.) necessity 4.) comdemnation 5.) expressed
all property has a owner (either go. or common joe) real property may be owned in the theses ways
1.) separate ownership, or several 2.) concurrent ownership - tenancy in common - joint tenancy -community property
priority of liens in foreclosure
1.)Cost of the Sale 2.) Property Taxes - This lien does not have to be recorded to be valid and/or collectable. - General (Ad Valorem Taxes) - Special Assessments 3.) First Mortgage or Deed of Trust 4.) All other mortgages and other types of liens in ORDER OF PRIORITY, or the date and time of recording, including IRS, mechanic's, materialman's, etc.
how to discover encroachment
A fence placed on the other side of a property line. Tree limbs hanging over a property line. A roof of a garage over the neighbor's lot line
what is known as scheme of improvements
A mechanic's lien MUST be recorded to become effective. To determine the start time of a mechanic's lien, this lien date must be THE DAY THE WORK STARTED
what is the regulations that also apply for tenancy in partnership are
All partners must agree to any sale/transfer of real property owned; Each partner has the right to possess the property of the partnership; Upon the death of one partner, his interest will pass to his heirs, who would then hold a right in the partnership itself, but NOT in any particular property; AND If an agreement cannot be reached between the existing partners and the deceased partner's heirs, then the entire partnership might have to be dissolved.
what is implication
An easement arising by implication from the acts or conduct of the parties. For example, a person acquiring mineral rights on a property also acquires an implied easement to enter the property for the purposes of removing the minerals
An easement is an interest in another's land. It is not a LIEN, but rather, it is a RIGHT.
Easements give someone else the right to USE a part of your property while you still retain the ownership rights. An easement does not give any possessory rights, just the right of ingress (enter) and egress (exit). For that reason, an easement is said to be an interest in property, but not an estate. The person who has an easement on another's land also has the right to profit from it, by removing minerals, oil and gas from it.
There are exceptions to the above rule, though; not all liens on real property rank in priority according to their respective dates of recording. These exceptions are:
Government liens, property taxes, and special assessments. Actual or constructive notice of another person's PRIOR rights to the property. Mechanic's liens. Agreements to the contrary.
what is a partition law suit
If other shareholders will not buy the interests of a shareholder who wants to sell out, and no one can be found to buy the shares, an individual can request that the courts sell either his/her shares (seek an equitable distribution) or the whole property
what is the process of a notice of completion
If the owner files a Notice of Completion within 10 DAYS of the completion of the project, then the original contractors have 60 days to file, while all others have 30 days to file. If the owner does NOT file a notice of completion, or the notice is invalid, then the contractors have 90 days to file. If the Notice of Completion is not recorded within 10 days, then it is not VALID.
Notes on judgement (lien)
Once a judgment has been made, this doesn't AUTOMATICALLY create a judgment lien on the property. However, a judgment lien IS created once the abstract of the judgment, or summary of the judgment, is recorded with the county recorder. The judgment lien is a general and involuntary lien against all real property that is located in the recording county. A judgment lien runs for 10 years.
in california what is the generally owned distinct forms of ownership
Severalty; Tenancy in Common; Joint Tenancy; Tenancy in Partnership; Community Property; and Community Property with the Right of Survivorship
what is a mechanic or materialman's liens are considered specific (against the property) liens.
These types of liens are involuntary, meaning they are not something that a person wants placed against his or her property; and they are statutory, meaning they are created by state and/or local rules for enforcement.
what is pur autre vie?
This is a life estate, based on the life of another, rather than the life tenant. The life tenant can have the incomplete bundle of rights until that third party dies. A pur autre vie life estate can be either an estate in reversion or an estate in remainderis
section 3082 et al is for
This law is based on the theory that the mechanic's work has produced IMPROVEMENTS on the property, and these improvements have added additional value to the property itself. Because of this, the property owner owes his end of the deal - the promised wages and materials that created the improvements.
what is joint tenancy
This occurs when two or more people have IDENTICAL interests in the whole property, with the SAME rights of possession AND the right of survivorship.
what is a tenant in common
Two or more people holding ownership concurrently, with the right to individually possess, will, or sell. This is undivided, but not necessarily equal interest
under what section does the statues provide for the enforcement of such a lien in the same manner as for a mechanic's lien
Under California Civil Code Sections 3081.1 through 3081.9
what is a Preliminary 20-Day
Under the California Civil Code, all mechanics and material suppliers must give WRITTEN NOTICE to the owner, the general contractor, and the construction lender (if applicable) of their right to file a lien against the property if they're not paid. The notice may be mailed or delivered in person to the applicable parties. This is known as the Preliminary 20-Day Notice, and must be served within 20 days of the first furnishing of materials, labor, equipment, or services to the job site.
Failure to completely pay off the loan on the courthouse steps will cause the debt holder to file_____________________ against the borrower and then the total assets of the borrower are available for collection by the debt holder (such as wages, cars, boats, campers, as well as the proceeds from the sold house).
a deficiency judgment
what are the two types of homesteads in California
a formal declared homestead and an automatic homestead, also known as a "Dwelling House Exemption."
by law what is a corporation is seen as
a single person having single personality and existence from those of its shareholder
what are general liens
are liens against the person and all assets (all real and personal property) as a result of a lawsuit when the court awards a judgment
what are specific liens
are liens applied to a specific piece of property and affect only that piece of property, such as a property tax lien
what is equitable lien
are liens arising out of a written contract that shows an intention of the parties to charge some particular property as security for a debt or obligation. Example: a mortgage lien or a judgment; all others are statutory liens, which are provided for under specific state laws.
To protect his right to be paid (by the owner/contractor), the mechanic who hasn't received payment may file a lien against the property in a manner prescribed in this section
california civil code section 3082 et al
Under Civil Code Sections 3115-3117, for the creation of a valid mechanic's lien, the lien must be recorded within a certain amount of time after the
completion on the project
what is formal declared homestead
e owner must complete and file a "homestead document" at the county courthouse. A dwelling house exemption, on the other hand, is available to ALL valid homeowners that haven't previously filed the "homestead document" at a courthouse. Keep in mind that BOTH types of homesteads offer the same protection in terms of "dollar amount."
what is general partnership
each of the partners shares in the profits or losses and in the management responsibilities
This legislation applies to all deeds or documents recorded after July 2, 2001. Under Civil Code Section 682.1 states
even a married couple that had previously acquired property as community property (before July 2, 2001), is permitted to switch from community property ownership to "community property with right of survivorship" ownership. If you have clients who wish to explore this type of ownership, you should advise them to discuss the specifics of their individual situation with their legal or tax expert.
what is tenancy in partners
exists when two or more persons, as PARTNERS, combine their interests, assets, and efforts into a business venture
what does this mean the life tenant possesses an incomplete bundle of rights for his lifetime. Once the life tenant dies, the life estate portion reverts to the grantor, who once again has the complete bundle of rights
grantor -> life tenant -> death of life tenant -> grantor
to create a joint tenancy arrangment the ddeed must clearly
in writing, the intention of the owners, and include the phrase, "as joint tenants" or "in joint tenancy."
what is the allodial system
indivifuals are entitled to own property without proprietary control of the king/government
what is a blanket encumbrance
is a VOLUNTARY lien placed over more than one part or parcel of property. (A release clause releases portions of the property held under a blanket encumbrance.)
what is a mortgage lien
is a bank loan you take out to buy the property.
what is a judgement (Lien)
is a court decision as a result of a lawsuit, and gives the FINAL determination of the rights of the parties in the proceeding.
what is a lien
is a document that uses a property to secure payment for a debt, OR the discharge of an obligation owed. A lien, as security for a debt, is usually money
what is a special assessment lien
is a legal charge against real estate by a public authority to defray the cost of specific local improvements, such as streets, schools, sidewalks, etc.
what is attachment (lien)
is a legal process by which property is seized and held, SYMBOLICALLY, until a pending judgment suit has been decided.
what is a mechanic's lien
is a lien filed when a workman does repair or construction work on your home. (We will discuss this in greater detail shortly.)
what is a judgment lien
is a loss in a lawsuit resulting in the charges being brought against everything you own.
what is a voluntary lien
is a money debt that the owner agrees to pay, and it is created by the buyer taking out a loan to finance the purchase of real estate (ex; mortgage lien)
what is a involuntary lien
is a money obligation that creates a burden (debt) on a property by government taxes, or legal action due to unpaid bills. (must liens are invol)
what is encumbrance
is anything that burdens or limits your title to a property. You might think of it as a right someone else has in your property
what is a Materialman's Lien
is filed when a lumberyard or supplier delivers construction materials to your home.
what is separate ownership
is ownership by one individual or by a corporation
what is lien is specfic to california
is the Design Professional's Lien
what is vesting
is the method in which one holds title to property. It involves placing a person's or persons' name(s) on the deed, along with a description of the method by which that person or persons will hold title.
what is a income tax lien
is when the government places a charge on the property if you did not pay income tax.
Any property owned by either the husband or the wife prior to their marriage may remain a separate property. In this situation, California law states that any proceeds from this separate property (rent or profits, for example) must not be commingled with the community property. If these funds are commingled, then the funds would become community property.
just understand it
involuntary life estates are legal life estates also called
marital rights
what is the tax lien
may occur, either through law or a court action, if a government tax is not paid. If the lien isn't settled, the property itself may have to be sold in order to pay back taxes to the government. Tax liens can be either specific or general. For example, property taxes would be considered specific, while income taxes and judgments would fall into the general lien category.
what does leasehold estate mean
mean, "i rent the property"
what does freehold estate mean
means, "I own the property"
If both spouses are entitled to a homestead exemption, the exemption of proceeds of the homestead shall be apportioned between the spouses on the basis of their proportionate interests in the homestead.
need to know
To be accepted for recording by the county recorder, the deed must have an acknowledgement (with the signature notarized); the name and address to which tax statements can be mailed; the transfer tax computation basis; names of all parties to the transaction; payment of the recording fee; and an adequate legal description.
need to know
what does fee simple (fee simple absolute) mean
owns the bundle of rights
what is the recording act
provides that, after being acknowledged, any instrument or judgment affecting the title to or possession of real property may be recorded. Recording is the legal process of making an instrument, or legal document, an official party of the records of a county, after it has been acknowledged. These legal documents include mortgages, trust deeds, deeds, leases, and contracts of sale. RECORDING gives constructive notice of the existence AND content of these instruments to the public
The Trust Deed is a written instrument that makes...
real property collateral for a loan. This is a type of security device that is both voluntary and specific. Note that, in California, a trust deed is the USUAL security device for real property.
what is community property
refers to ALL property acquired by a husband and wife DURING THEIR MARRIAGE. (share equally)
liens must be paid in full before one can...
sell or refinance the property
what is ordinary life estates
the grantor separates his fee simple estate into - a life estate that is deeded to a life tenant -a reversion estate estate that is retained by the grantor
how many main forms of co-ownership pr concurrent ownship
three
A Mortgage is a lien that is used...
to secure real property for the payment of a promissory note, or debt. A mortgage, like the Trust Deed, is both voluntary and specific. Mortgages, unlike trust deeds, are rarely used in financing California properties. It is common in California for many people to USE the term "Mortgage" when they are, in fact, referring to a trust deed. We will discuss this topic in greater detail in a later chapter
what is separate property
which is anything that either spouse brought to the marriage, or anything that was acquired before the marriage, or acquired by gift or inheritance
what is the Design Professional's Lien
which is similar in nature to the mechanic's lien, but addresses the work of a design professional, including a certificated architect, a registered professional engineer, or a licensed land surveyor
what is the notice of nonresponsibility
which should be filed by an owner within 10 days of discovering that an unauthorized person, such as the landlord of a property, is performing construction on his property. The Notice of Non-responsibility is posted on the property, stating that the owner is NOT responsible for the work being done. More importantly, the notice releases the owner from any liability that may be caused by the unauthorized work.
what is the community property with right of survivorship
which transfers ownership to the spouse upon the death of the other spouse, WITH income tax benefits. (The surviving spouse gets the benefit of a stepped up basis for 100% of the property upon his/her spouse's death.) Probate proceedings are not needed in this type of situation