RE 170 Lesson 03 Transfer of Real Property

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Lesson 3: Transfer of Real

Property

Principles of California Real Estate

Alienation

» Alienation: Process of transferring ownership of (title to) real property from one party to another.

�May be voluntary or involuntary.

AlienationVoluntary alienation

» Voluntary alienation: An owner voluntarily transfers an interest in her land to someone else.

§ Patents§ Deeds§ Wills

Dedication

Elaine

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Transfer of title (or ownership) from the seller to the buyer = the culmination of a real estate transaction. Different ways title to real property can be transferred: 1) Voluntarily transfers- Transfer by deed (the most common method) 2) Involuntarily transfers- foreclosure, condemnation, or adverse possession 3) The recording system-who owns what interest in a piece of property 4) The importance of title insurance

Elaine

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Alienation is a general term that refers to all of the different methods by which real property can be transferred from one person to another. Whether accomplished by means of a deed, a will, foreclosure, or in any other way, a transfer of ownership is a form of alienation. Alienation is the opposite of acquisition of property.

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An owner may choose to give away or sell his or her property to someone else/title can be transferred without any action by the owner/ against the owner's will. eg: a court-ordered foreclosure.

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Voluntary Alienation Patents

» Patent: Instrument used to convey government land to a private individual.

Voluntary AlienationDeeds

» Deed: Instrument which, when properly executed and delivered, conveys title to real property from the grantor to the grantee.

Deed do not conveys personal property. - Most common method of voluntary alienation - The transfer of real property from the grantor to the grantee by means of a deed is referred to as a conveyance.

DeedsParties to a deed

» Grantor: One who grants an interest in real property to another.

» Grantee: One who receives a grant of real property.

- Bill of Sale is the document used to transfer title to personal property from a seller to a buyer.

Elaine

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When the United States was founded, the new government claimed ownership of all the land within its territory that was not already privately owned. To transfer property into private hands, the government gave an individual or a company a document called a patent. The document on your screen, dated June 1st, 1861, is a federal patent for some land in Northern California. It was signed by a representative of the federal government on behalf of Abraham Lincoln, who was president at the time of the conveyance.

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DeedsTypes of Deeds

» Grant deed» Quitclaim deed» Trustee’s deed» Deeds executed by court order» Warranty deed» Special warranty deed

Types of DeedsGrant Deed

» Grant deed warrants that grantor has not:�conveyed title to anyone else�caused any undisclosed encumbrances

to attach to the property

» Both warranties apply even if not stated in the deed.

Grant DeedAfter-acquired title

» Grant deed conveys after-acquired title.

» After-acquired title: Title acquired by a grantor after she attempted to convey property she didn’t yet own.

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The grant deed is the most commonly used type of deed in CA.A grant deed must use the term "grant" in its words of conveyance.

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2 warrants: 1) the grantor has not previously conveyed title to anyone else, and 2) the grantor has not caused any encumbrances to attach to the property other than those already disclosed. These warranties apply even if not expressly promised in the grant deed.

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It's impossible to convey something you don't own. If a deed states that it's conveying a particular property, but the grantor doesn't actually own that property, the deed can't transfer title to the grantee. But a grant deed will convey after-acquired title to the grantee. After-acquired title is an interest in the property that the grantor acquires after executing the deed. Example: Under their ailing father's will, Steve and John are to inherit their father's entire estate, sharing it fifty-fifty. While their father is still alive, Steve sells his 50% interest in one of the estate properties to John.Steve gives John a grant deed. At this point, Steve's deed doesn't transfer title to John, since Steve doesn't hold title. But after their father dies, Steve's after-acquired title will pass to John through the grant deed.

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Types of DeedsQuitclaim deed

» A quit-claim deed:�contains no warranties�does not convey after-acquired title�conveys only the interest held by the

grantor at the time it is given If the grantor has no interest in the property at that point, the quitclaim deed conveys nothing to the grantee.

Quitclaim DeedCloud on title

» Cloud on title: A claim, encumbrance, or apparent defect that makes the title to a property unmarketable.

Example: Construction lien filed against the property.

» A quitclaim deed is often used to “cure” a cloud on the title.

Quitclaim DeedReformation deed

» One common reason for using a quitclaim deed is to correct an error in an earlier deed, e.g. spelling mistakes.

» A quitclaim deed used this way may be referred to as a reformation deed.

Elaine

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A common reason for using a quitclaim deed is to clear up minor title defects (clouds on the title). "Clouds" - problems appearing in the public record that cast doubt on the status of the title. A cloud might be created by: - a technical flaw in an earlier deed, such as a typographical error in the property description. - unreleased lien, which indicates that there may be an unresolved claim against the property.

Elaine

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Reformation deed example: Carla bought a home when she was single. She took title under her maiden name, Carla Jennings. She later married and took her husband's name, Larkin. When Carla sold the home, she executed the grant deed under her married name, Carla Larkin. This created a cloud on the title, because the public record shows that Carla Jennings bought the home, but Carla Larkin sold it. To remove the cloud from the title, the new owners might ask Carla to give them a quitclaim deed signed Carla Jennings.

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Quitclaim DeedLanguage

Should use the words:� release� remise�quitclaim

Should NOT use the words:�grant�convey

Types of DeedsTrustee’s deed

» Trustee’s deed: The deed given to a successful bidder at a trustee’s sale (deed of trust foreclosure).

Types of DeedsSheriff’s deed

» Sheriff’s deed: The deed used to transfer property to the highest bidder at a court-ordered foreclosure sale.�Example: Mortgage foreclosure sale

Elaine

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Quitclaim deeds are also sometimes used in situations involving co-ownership, when one co-owner is conveying his interest in the property to the other co-owner. eg: part of a divorce settlement, one ex-spouse might quitclaim his interest in the family home to the other ex-spouse. A quitclaim deed is not appropriate for a standard real estate transaction; a buyer should insist on a grant deed. If a seller tries to use a quitclaim deed, that should be a red flag for the buyer. There may be some problem with the title that the seller hasn't disclosed

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The general warranty deed - most commonly used type of deed in many states outside CA. (In CA, the reliance on title insurance to assure marketable title has led to the replacement of the general warranty deed.) The general warranty deed is the type of deed that gives the greatest protection to the buyer. A grantor under a general warranty deed makes five warranties, or covenants, to the grantee. These covenants warrant against defects in the title that occurred either before or during the grantor's period of ownership. A special warranty deed makes the same five promises, but the warranties are limited to defects that arose during the grantor's period of ownership. The grantor makes no assurances about any defects that occurred before he or she owned the property.

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Tax Deed - When the government forecloses on property because the property taxes were't paid, the foreclosure sale purchaser receives a tax deed. Gift Deed - If one party gives property to another, she may use a gift deed. A gift deed is not supported by consideration, and is the easiest for a court to set aside if there is any hint it was executed in order to defraud creditors.

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SummaryPatents and Deeds

» Alienation» Patent» Deed» Grant deed» Quitclaim deed

Requirements for a Valid Deed

» Be in writing and signed» Identify grantor(s) and grantee(s)» Be signed by a competent grantor» Specify a living grantee» Contain words of conveyance» Have adequate description of the property

Requirements for a Valid DeedIn writing

» Under statute of frauds, deed to real property must be in writing.

» Statute of frauds: Law requiring certain contracts and other legal transactions to be in writing and signed in order to be enforceable.

Under the statute, an oral conveyance of title to real property is not valid.

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Requirements for a Valid DeedIdentify all parties

» Both the grantor(s) and the grantee(s) must be identified in the deed.

» Grantee may be described rather than referred to by name.

Example: Conrad Adams hereby grants title to his only son.

Requirements for a Valid DeedSigned by competent grantor

» Deed must be signed by the individual(s) who will be bound by the transfer, and they must be legally competent.

» Competent: Adult of sound mind, for the purposes of entering into a contract. In CA

a Grantor must be at least 18 years old to execute a valid deed.

Requirements for a Valid DeedSigned by competent grantor

» If a grantor can’t sign her name ( due to disability or illiteracy) she can make her mark instead, but the mark must include witness signatures.

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Important things about the grantor's signature: 1) if the grantor's signature is determined to be a forgery, the deed is void. 2) if the grantor can't sign the deed himself, it may be signed by the grantor's attorney in fact. (An attorney in fact will write the principal's name, followed by her own signature as attorney in fact.) Attorneys in fact are not necessarily lawyers. They're people that the grantors have appointed as their representatives.

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Signed by Competent Grantor Power of attorney

» Power of attorney: A document authorizing/appointing another party (attorney in fact) to act on behalf of the grantor.

» For an attorney in fact to sign a deed on a grantor’s behalf, the power of attorney must:� give the attorney in fact this authority, and� be recorded in the county where the property

is located. **An attorney in fact cannot deed the grantor's property to himself/herself.

Signed by Competent GrantorTransfer by corporation

» Deeds for corporate property are usually signed by an authorized corporate representative, and the corporate seal must accompany the signature.

Signed by Competent GrantorMore than one grantor

» All grantors must sign deed. �A deed lacking a necessary signature is

invalid.�An unnecessary signature does not

invalidate the transfer.

» Signatures of both husband and wife are required to convey community property.

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If the power of attorney specifically authorizes it, a deed can be executed on the grantor's behalf by the attorney in fact.

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When the property being transferred is owned by more than one person, all of the owners must sign the deed as grantors. If the previous deed named several grantees, all of those grantees should be signing the new deed as grantors. To convey community property, both spouses must sign the deed. If a grantor is married, his or her spouse should also sign the deed, even if they don't think the property is community property. This is an important precaution, since it isn't always easy to tell which of a couple's holdings are community property.

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Requirements for a Valid DeedLiving grantee

- A grantee need not be competent for a deed to be valid, but they must be alive (or legally in existence, if a corporation.)

- A child (or mentally incompetent person) can receive title to property, but can’t convey title.

- A valid deed requires a living grantee. If the grantee is fictious (i.e. nonexistent) or dead, the deed does not transfer title.

Requirements for a Valid DeedWords of conveyance

Requirements for a Valid DeedAdequate property description

» It’s advisable to use a property’s full legal description in a deed, although a deed can be valid without it if the property is identified sufficiently.

Elaine

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The deed must include "words of Conveyance" or "the granting clause". Words of conveyance: The explicitly stated words indicating the grantor’s intent to transfer an interest in property to the grantee. The single word “grant” or "convey" is usually sufficient.

Elaine

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The habendum clause typically follows the granting clause, defines/ limits the grantee's estate, may specify fee simple ownership or some lesser interest (eg: a life estate) Example: 'To have and to hold unto Dennis Morrison, grantee, a life estate in the property described herein.' "The habendum clause" also called the "to have and to hold clause". If a deed doesn't have a habendum clause = a fee simple absolute. If the grantor means to convey anything less than a fee simple absolute, it's important to include a habendum clause to make that clear.

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Most deeds have additional features that aren't absolutely necessary: -the habendum clause -the exclusions and reservations clause -the recital of consideration; and -the date of execution.

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Requirements for a Valid Deed Additional Features

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The Habendum Clause

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An Exclusions and Reservations Clause

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Most deeds contain a brief statement concerning encumbrances, called an exclusions and reservations clause. It lists any easements, private restrictions, or liens that will burden the grantee's title. valid encumbrances ordinarily continue in effect even if they aren't listed in the deed.

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The Consideration/ Recital of Consideration

Elaine

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In most transactions, the consideration for the conveyance is the purchase money that the grantee gave the grantor in exchange for the property. The consideration exchanged in a transaction doesn't have to be stated in the deed for the document to be valid. Even so, a recital of consideration appears in many deeds. The recital usually doesn't state the actual purchase price. Instead, it says something like 'for good and other valuable consideration.' The purpose of the recital of consideration is to indicate that the property wasn't a gift from the grantor to the grantee. If the property were a gift, the grantor's creditors might be able to assert their claims against it.

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Date of Execution/ Conveyance

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A deed can be valid even though it's undated. But as a matter of convenience, it's important to include the date of the conveyance on the deed.

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Property ConveyanceAcknowledgment, delivery, acceptance

» To actually convey property a valid deed must be acknowledged and delivered by the grantor, and then accepted by the grantee.

Property ConveyanceAcknowledgment

» Acknowledgment: Grantor signing a legaldocument in the presence of a formal witness

(e.g. a notary public) and that he signed deed voluntarily, and witness adds official documentation. �Witness/Notary cannot have an interest in transfer.�Without acknowledgment, deed may still be valid—but cannot be recorded.

Property ConveyanceDelivery

» Delivery: Formal transfer of deed from grantor to grantee, resulting in transfer of title.�Delivery must occur while grantor is alive.�Grantor must intend to immediately

transfer title to grantee. * Physical delivery to the grantee in person isn't absolutely necessary. * The grantor may give the deed to an agent of the grantee (eg, an escrow agent)

Elaine

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Besides a valid deed, to carry out the conveyance, these steps are important to help transfer title to the grantee: 1) Acknowledgment 2) Delivery 3) Acceptance

Elaine

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An interest in transfer: The notary who signs the statement cannot be an interested party. And if the notary is an employee of a corporation who is a party to the deed, the notary may not have a personal interest in the property, nor may she be an officer of the corporation. The grantor gives the notary public proof of identity and signs a statement declaring that he is signing the deed voluntarily. The notary also signs a statement declaring that she witnessed the acknowledgment of the document. Strictly speaking, a valid deed can transfer title even if it is not acknowledged. But in CA & many other states, a deed cannot be recorded unless it has been acknowledged.

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Property ConveyanceAcceptance

» Conveyance is completed when grantee accepts deed.�Deed may also be accepted by an agent.

Voluntary Alienation Wills

» Will: A written instrument disposing of property upon the death of the maker (the testator). Also called a testament.

» A valid Will must be:� in writing�signed by the testator (the person making

the will) -- Attested to by at least two or more

competent witnesses

WillsHolographic will

» Holographic will: an unwitnessed will that isdated, signed, and written entirely in the

testator's own handwriting, rather than typewritten or filled in on a printed form. �California recognizes holographic wills.�Typewritten or pre-printed provisions will

be disregarded by a court, except for statements of intent in a commercial form.

Elaine

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The law presumes that a deed has been properly delivered and accepted if it's in the possession of the grantee, or if it has been recorded. When a valid deed is delivered and accepted, ownership of the property transfers from the grantor to the grantee.

Elaine

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The will is another type of document that may be used to transfer property ownership voluntarily. A property owner uses a deed to transfer real property while he is alive, and he uses a will to transfer it upon his death. The witnesses sign a statement indicating that the testator signed the document in their presence and declared it to be his or her will. When a person dies leaving a valid will, he is said to have died testate. If he dies without a valid will, he is said to have died intestate.

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A holographic will is an exception to the requirement that all wills be witnessed.

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WillsTerminology

» Beneficiary: Person who receives property under terms of a will.�Personal property is bequeathed to a

legatee.�Real property is devised to a devisee.

» Executor: Person who carries out will and settles estate (or administrator if noexecutor named) after the testator's death.

He/She is appointed by the testator.

WillsProbate

» Probate:The legal process of establishing the validity of a will and distributing propertyaccording to its terms is called probate.In CA a will is probated at the superiorcourt level. If a real estate broker sells estate property,both the listing and commission must be approved by the probate court.

WillsIAEA

» If the will is administered under the Independent Administration of Estates Act (IAEA) the executor or administrator may sell real property without court approval, if the beneficiaries do not object.

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A will may be used to transfer the testator's entire estate, including both real property and personal property. A testator who transfers personal property by will is said to bequeath the property. The recipient is called a legatee. When real property is transferred by will, the testator is said to devise the property. The recipient is called a devisee. If no executor was named in the will, the court will appoint a person(an administrator) to manage and distribute the estate of the deceased.

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A probate sale may be necessary, in order to divide the deceased person's estate among his or her heirs. A broker may be involved in the sale of probated real property, but the commission rate will be set by court order. The court must also approve any listing agreement between a broker and a representative of the estate. Any bid in a probate sale must be at least 90% of the property's appraised value to be accepted by the court. Alternately, the Independent Administration of Estates Act allows the executor or administrator of an estate to sell property without court approval if none of the estate beneficiaries object.

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» Deed requirements» Statute of frauds» Words of conveyance» Acknowledgement» Delivery» Wills» Probate

SummaryVoluntary Alienation

AlienationInvoluntary alienation

» Involuntary alienation: Transfer of property interest against the will of the owner, or without action by the owner.

» May occur through:�operation/ by rule of law�external causes/ result of natural forces�adverse possession

Involuntary AlienationDedication

» Dedication: Private party transfers land to the public.�Sometimes voluntary, but is typically

required by a public entity.

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Dedication - when private property is transferred to public ownership, w/o compensation to the private owner. It can be a voluntary gift and the transfer is made under some legal constraint. It is a gift only in the sense that the owner is not paid for the property. This type of transfer is called involuntary dedication.

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Dedication - the transfer of real estate from private ownership to public ownership, without payment to the private owner. As we'll discuss shortly, in some cases dedication is involuntary, but it can be a voluntary gift to the public. eg: a philanthropist might donate land to the city or county for a park.

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Involuntary AlienationStatutory dedication

» Statutory dedication: A dedication required by law, for example requiring the dedication of property for sidewalks and streets as a condition for subdivision approval.

Involuntary AlienationIntestate succession

» Intestate succession: When someone dies without a valid will, the decedent’s property passes according to the laws of descent.

» If no will, the lawful successors are called heirs (instead of beneficiaries.)

Involuntary AlienationEscheat

» When property owner dies without will or any surviving heirs, property ownership escheats (reverts) to the state.

» State is ultimate heir when no other rightful heirs to the property exist.

- The state may also acquire ownership of abandoned property through escheat.

Elaine

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The most common type of involuntary dedication is statutory dedication. To obtain permission to subdivide land, a developer is required to dedicate some land in the subdivision for public streets and utility easements. It's called statutory dedication because the developer is complying with procedures prescribed by law, in the relevant statute. Common law dedication results when a government entity decides that a property owner has acquiesced in public use of his property for a prolonged period of time. This dedication may take the form of an actual transfer of ownership, or it may simply result in the grant of an easement.

Elaine

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When a property owner dies intestate, title to the property passes to the owner's nearest living relatives according to the rules of "intestate succession". These rules are set forth in a state statute(章程,規則;條例, 法令,法規;成文法) In CA, the statute states that all community property passes to a surviving spouse. If there is one child, the owner's separate property is divided one-half to the surviving spouse and one-half to the child. If there is more than one child, one-third of the owner's separate property is given to the surviving spouse, and the remaining two-thirds is divided among the children.

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Those who acquire property by intestate succession receive it by "descent", rather than by "devise" or "bequest'. The probate court will appoint an administrator to distribute the intestate person's real and personal property to the heirs. Many of the rules we discussed in regards to probating a will also apply to the probate of an intestate estate.

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Involuntary AlienationCondemnation

» Condemnation: Taking private property for public use through power of eminent domain. Constitutional Requirements:�Gov intended use must be a public use.�Gov must pay "Just compensation" to

owner of the property

» Power of eminent domain may be exercised by government, or delegated to quasi-public entities.

Involuntary AlienationInverse condemnation

» If a property owners feels that her property has been taken or damaged by a public entity, the owner may file an inverse condemnation action to force the government to pay the fair market value of the property.

Involuntary AlienationCourt order

» Involuntary transfers of property interests can also occur under court order. The most common examples are:�quiet title actions�suits for partition�foreclosure actions�petitions for bankruptcy

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If a government entity decides a piece of property is needed for public use, it has the constitutional power to buy the property from the owner, even if the owner doesn't want to sell. This constitutional power is called the power of eminent domain, and the legal procedure used to exercise that power is called condemnation. A forced sale in this context is sometimes called a "government taking", or just a "taking". Example: Suppose the state is planning a freeway that will run through a residential neighborhood. The state plans to buy many of the homes in the neighborhood so that it can demolish them and clear a path for the freeway. If a homeowner refuses to sell her property, the state can file a condemnation lawsuit to force her to sell. "Public use": Ted, a farmer, owns some fields on the edge of Cloverville. The Cloverville town council could condemn Ted's fields for use as a public park. But it could not condemn the fields and turn them over to another farmer. "Just compensation": compensate the owner by paying the fair market value of the property it is condemning.Power of eminent can be granted to privately owned companies that serve a public purpose, eg: a railroad or a utility company may condemn property under certain circumstances.

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When a private owner believes that some action by a government entity has destroyed the value of his property, the owner may file a lawsuit demanding just compensation. This is called an inverse condemnation lawsuit. For example, the city built an airport next to Ken's chicken farm. The air traffic noise makes the property unsuitable as a chicken farm, and its value is severely reduced. If Ken files an inverse condemnation lawsuit against the city, the court may order the city to compensate him for his financial losses.

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Court Order Quiet title action

» Quiet title action: Court action intended to settle dispute over title to a particular property.

Court Order Suits for partition

» Partition: Lawsuit brought by a co-owner to have property divided. Once divided, each co-owner will own his part in severalty. �Co-owners may also partition property

by agreement.

Court OrderForeclosure

» Foreclosure: Sale of property pursuant to court order to satisfy a lien (may be any type of lien).

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When there's a cloud on a property owner's title (the property is unmarketable), in some cases a quitclaim deed can be used to clear away a cloud. The owner and someone with a claim against the property may be able to negotiate and resolve their dispute. Then the claimant can clear the title by executing a quitclaim deed in favor of the owner. If the parties can't agree, there is a legal procedure that can resolve the dispute and clear away the cloud. This is called a "quiet title action". In a quiet title action, the court considers the evidence presented and decides who holds what interest in the property.

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A suit for partition is a way of dividing up property owned by more than one person. If co-owners can't agree on how to divide the property, or if they disagree about whether to sell it, one or more of the co-owners can file a suit for partition. The judge will decide how to divide the property, and this decision will be binding on all the co-owners. If a physical division of the property isn't feasible, the judge will order the property to be sold and divide the proceeds among the co-owners.

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A creditor with a lien against a debtor's property has the right to foreclose on the property if the debt isn't paid. To foreclose, the creditor files a lawsuit asking the court to order the property to be sold, so that the debt can be paid out of the sale proceeds.

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Court OrderBankruptcy

» Bankruptcy: Property may also be conveyed by order of a bankruptcy court. The court has the authority to distribute or sell the debtor’s property to satisfy creditor claims.

Involuntary AlienationAdverse possession

» Adverse possession:

» Five requirements for adverse possession: �actual, open, and notorious�hostile to the owner’s interest�under claim of right or color of title�continuous & uninterrupted for five years�adverse possessor must pay property taxes

during required period of possession.

Involuntary AlienationAdverse possession

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Once a bankruptcy petition has been filed, the court may order the debtor's property distributed to creditors. If the debtor owns real property, the court may order it sold and the proceeds used to satisfy the creditors' claims against the debtor.

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Example: Jasper and Alice own neighboring parcels of land. Jasper mistakenly builds a fence 15 feet over the boundary on Alice's property. Alice doesn't recognize the mistake. Jasper's fence remains in place for five years, the required statutory period in CA. At the end of the five-year period, title to the 15-foot strip of land passes to Jasper by adverse possession. The main purpose: to encourage the fullest and most productive use of land. Title is transferred from an owner who has ignored the property for a long period of time to someone who is actively putting it to use. One important exception: property owned by the government can't be adversely possessed.

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Someone acquires legal title to owner of record's property by occupying it over a long period without the owner's permission. One of the most interesting forms of involuntary alienation.

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Adverse PossessionActual, open, and notorious

» Actual possession: Occupation and use of the property in a manner appropriate to the type of property.

» Open and notorious possession: Possession of the property in a way that gives the owner of record reasonable notice their property interest is threatened.

Adverse PossessionHostile to the owner’s interests

» Hostile possession: Possession without the owner’s permission. The adverse possessor must intend to claim ownership of the property and defend that claim against all parties.

Adverse PossessionClaim of right or color of title

» Refers to situations where an adverse possessor has a good faith, but mistaken, belief that she is the owner of the land.

�Example: Deed’s legal description incorrectly shows the boundary extending ten feet further than it really does. The owner believes the additional land belongs to her, so she fences it in.

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"Actual Possession" - For agricultural property, would mean putting the land to agricultural use. Possession is open and notorious if it puts the true owner on notice that someone else is making use of the property. The adverse possessor's use must be conspicuous, not hidden. This requirement ensures that the true owner will have a chance to prevent the adverse possession by ejecting the adverse possessor from the property.

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For possession to be hostile to the owner's interest, the adverse possessor must act as if he owns the property.As a general rule, possession is considered hostile as long as the adverse possessor does not have the true owner's permission to be there. Possession with the owner's permission can never lead to a transfer of title. However, 'hostile' does not require any confrontation between the adverse possessor and the true owner. When Jasper built his fence, neither he nor Alice realized that the fence was encroaching on Alice's land. Therefore, her permission was not obtained. The building of the fence amounted to hostile possession by Jasper.

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Possession under color of title is considered hostile. An adverse possessor has color of title if she mistakenly believes that the property belongs to her, because a defective deed or other document says that it's hers.

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Adverse PossessionContinuous and uninterrupted

» The adverse possessor must have continuous and uninterruptedpossessionfor 5 years (California law)

» Tacking: Successive adverse possessors can add together their periods of possession to satisfy the time/ statutory period.

Adverse PossessionPayment of taxes

» In addition to continuous and uninterrupted possession for 5 years, California law also requires the adverse possessor to pay taxes on the property during that period.

Involuntary AlienationExternal causes

» Accession:The legal name for the processwhen real property is involuntarily transferred

from one owner to another by natural forces.

» Accession includes:�accretion

� reliction�avulsion

Elaine

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"Tacking" example: Suppose Jasper built the fence in 1996. In 2000, Jasper sold his property to Gloria. In 2003, Alice lists her property for sale. A survey requested by a prospective buyer reveals that the fence is fifteen feet over the actual boundary. Alice asks Gloria to remove the fence. Gloria consults an attorney. The attorney tells her she doesn't have to remove the fence. The requirements for adverse possession have been met, and the strip of land now belongs to Gloria. Although Gloria has owned the property for only 3 years, her period of adverse possession can be tacked onto Jasper's 4 years to meet the 5-year requirement.

Elaine

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When all the requirements for adverse possession are fulfilled, title passes from the original owner to the adverse possessor automatically. In some cases, neither party even realizes that this has happened. eg: 5 years after Jasper built the fence, the owner of Jasper's property would become the owner of the disputed strip of land. Because there is no documented evidence that the title has changed hands, for the adverse possessor's title to become marketable he must "perfect" it, either by recording a quitclaim deed from the former owner or by filing a quiet title suit. eg: Alice might refuse to give Gloria a quitclaim deed. Then Gloria would have to file a quiet title action and prove to the court that she had met the requirements for adverse possession.

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Involuntary AlienationAccession

» Accretion: When riparian or littoral land is enlarged by waterborne soil (river deposits) owner gets title to added soil.» Reliction: When a body of water gradually

retreats, the newly exposed soil belongs to the landowner.» Avulsion: When land is torn away by

flowing water, or when land is exposed by a sudden change of watercourse.

SummaryInvoluntary Alienation» Dedication» Intestate succession» Condemnation» Quiet title» Partition» Foreclosure» Adverse possession

The Recording System

» Recording: Filing a document at the county recorder’s/cleck office, in county where property is located, so information is available to the public.

» Whenever interest in real property is transferred, new owner should record deed or other transfer document.

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Land beside a body of water is increased by "accretion" when waterborn silt is depostited on the shore. Deposits = "alluvion" or "alluvium". Accretion occurs very gradually, build-up of alluvion is hard to perceive. When land area is added to by "accretion", the landowner acquires title to the newly depostied soil. Land beside a body of water is increased by "reliction"(very gradual process) when water recedes slowly and exposes land that's been underwater. The adjoining landowner acquires title to the newly exposed land.

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Recording a document means having it placed in the public record, so that the information set forth in the document is available to the general public. State law prescribes the procedures that the county clerk must use in recording documents.When a document is filed for recording, the date and time of filing are noted, and the document is assigned a recording number. This establishes the document's priority, in case there are competing claims. After the document has been scanned or microfilmed, the original will be returned to the appropriate party.

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"Avulsion" occurs when land is violently torn away by flowng water. If possible, owner may reclaim the land within a reasonable period. If isn't reclaimed, it becomes part of property where it ended up. "Avulsion" can refer to a sudden change in a watercourse, oftern as the result of a storm and flooding. This usually does not result in a transfer of title.

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The Recording SystemProcedures

» Documents recorded in chronological order, based on order received.» Documents filed by grantor index and

grantee index (by last names alphabetically), and sometimes by property description.» Computerization has made indexing less

important; in most cases search functions can locate documents in public record.

The Recording SystemTitle search

» Title search: An examination of the public record to determine al rights, claims, and interests affecting title to a property.�Before a property is sold a search is done

to verify seller’s title and identify claims.�Tracing the chain of title back to previous

owners helps establish the seller's title.

The Recording SystemLegal effects

» Documents transferring title, establishing interest in property, or creating or removing encumbrances should be recorded.

A lis pendens - a document which states that a pending lawsuit may affect title to a property. A commom document not recorded: the residentialpurchase agreement (a sales contract).

Elaine

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These grantor and grantee indexes were used for "title searches" - to find out who holds what interest in a particular piece of property. This is most commonly done when the property is about to be sold. Someone performing a title search can look up the seller's name in the grantor index, to make sure the seller hasn't already conveyed the property to someone else. Next, by looking up the seller's name in the grantee index, the title searcher can find the deed or other document by which the seller acquired title. Then she can look up the grantor named on the seller's deed to find the previous deed, and so on. Tracing the chain of title back through several owners establishes the validity of the seller's title. A person performing a title search will usually search all public records, not just those available at the county recorder's office. The person will typically also search the records at the Federal Land Office and the county clerk's office. Most buyers don't carry out their own title search. Instead, they rely on a search conducted by a title insurance company.

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Documents recorded included: -a deed -a mortgage -a deed of trust -a land contract -an option to purchase -a long-term lease, or -a lis pendens.

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The Recording SystemLegal effects

» Having a document recorded has two important legal effects:�Provides noticeof the interest conveyed�Establishes priority for that interest

The Recording SystemNotice

» Actual notice: A person has actual notice of a fact if she knows it, e.g. observed it, read about it, or was told.

» Constructive notice: A person has constructive notice of a fact if she should(reasonably) know it, even if she does not.

The Recording SystemConstructive notice

»Recording a document concerning real propertyprovides constructive notice to the general

public of the interest set forth in the document (Any member of the general public may

inspect the records of the county recorder.)

» Anyone who later acquires an interest in property is considered to have constructive notice of an earlier recorded document (even if he didn't have actual notice.)

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The primary purpose of recording a deed is to provide public notice of the grantee's interest in the property. Notice is an important legal concept. Legal rights and liabilities often depend on whether a party had notice of a particular fact at a given time.

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He could have found out about it if he had consulted the public record. The constructive notice provided by recording a deed protects the grantee. It establishes the priority of the grantee's claim to the property over the potential claims of others.For instance, suppose a grantor deeded the same piece of property to two different people. As a general rule, the person who recorded his or her deed first would have good title. Bob Baker's deed(recorded earlier Jan30) would have priority over Mark Matthews' deed (Feb 5).

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SummaryThe Recording System

» Recording procedures» Title search» Actual notice» Constructive notice» Legal effects

Title Insurance

» Title insurance: Insurance that protects against losses caused by title defects.� If someone makes a claim against title,

title company defends policyholder’s position and reimburses them for any loss.

Title Insurance

» A title policy issued to a property buyer is called an owner’s policy.

» A title policy protecting a lender’s security interest in the property is called a

mortgagee’s policy.

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Like recording, "possession of property" provides notice of an interest in the property or a claim against it. For example, suppose a grantee's deed isn't recorded, but the grantee takes possession of the property. A subsequent purchaser couldn't claim that she had no notice of the grantee's interest, because the grantee's possession provided notice. If the purchaser had visited the property, she would have found out about the grantee's claim.

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A title insurance policy is a contract between a title insurance company and a policyholder. The policyholder is ordinarily either a property buyer or a lender providing financing for a transaction. In the policy, the title insurance company agrees to reimburse the policyholder for financial losses resulting from title defects covered by the policy. And if someone makes an adverse claim against the title, the title company will handle the legal defense against the claim.

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Title Insurance 土地房產所有權保險賠償金 An investigation of the seller's title is an essential step in a real estate transaction. A title company not only investigates the chain of title, it offers the buyer the additional protection of title insurance. Without title insurance, the most protection a home buyer could receive would be to obtain a copy of "the chain of title" (a complete history of all the recorded interests in a property) or "an abstract of title" (a condensed history of those interests), and to have the history examined by an attorney who could render an opinion on the condition of the title. In CA, use of an abstract of title has been almost entirely replaced by use of title insurance.

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Title InsuranceObtaining a policy

» Steps in process for obtaining policy:�Title company performs title search� Company issues title report.�Any defects and encumbrances found are

listed in report and excluded from coverage when policy issued.

Title InsuranceObtaining a policy

Title InsuranceTypes of coverage

» Traditionally, title insurers have offered two main types of coverage:

�standard�extended

» In recent years they have been joined by a third type:

�homeowner’s

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The first step in obtaining title insurance for a transaction is the title search. The buyer or seller pays a fee to the title company to cover the cost of the search. Most companies have their own title plant, a copy of the public record that is constantly updated. Based on the title search, the company issues a title report for the property. All defects and encumbrances found in the public record are listed in the report. These will be excluded from coverage when the policy is issued.

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The coverage of the title insurance policy is limited to the condition of the title as of the date of the policy. Encumbrances or title defects that arise later will not be covered.

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If the title report reveals unexpected problems, the buyer or lender may require the seller to clear them up before the transaction proceeds. When the condition of the title is satisfactory to the buyer or lender the title company issues the insurance policy. A title insurance policy lasts as long as the policyholder has a legal interest in property. A single premium covers the entire life of the policy.

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Title InsuranceStandard coverage

» Standard coverage: The standard coverage policy, also known as a CLTA (California Land Title Association) policy, protects against latent defects (e.g. forged deeds) and undiscovered recorded encumbrances.

» It doesn’t protect against problems that would only be discovered by a property inspection or

survey of the property, such as adverse possession or an encroachment. .

Title InsuranceExtended coverage

» Extended coverage: An extended coverage policy, also known as an ALTA (American Land Title Association) policy, covers the same things as a standard coverage policy, plus problems that should be discovered through inspection of the property.

» A mortgagee's policy is nearly always an extended coverage policy.

Title InsuranceHomeowner’s coverage

» Homeowner’s coverage: Homeowner’s coverage is broad, but only available for residential property up to four units. It includes everything in standard coverage and most of the things in extended coverage, e.g. encroachments.

» Homeowner’s coverage also protects extra matters such as violations of restrictive

covenants.

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A standard coverage title insurance policy insures against losses resulting from any encumbrances of record that the title searcher overlooked and failed to include in the title report. It also insures against hidden problems such as forged signatures, fraud, incompetent grantors, and improperly delivered deeds. These defects usually can't be discovered by examining the public record, but the title company takes on the risk that this type of problem may exist.

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Before issuing an extended coverage policy, the title company sends an inspector to the property to look for encroachments and other potential problems. Whenever a buyer finances a real estate purchase with an institutional loan, the lender will request an extended coverage policy to protect its interest, especially its lien priority. In other words, a mortgagee's policy is nearly always an extended coverage policy.

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In most residential transactions, the owner's title insurance policy is a homeowner's coverage policy.

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Title InsuranceGovernment action

» Title insurance policies do not insure against losses due to government action, such as condemnation or zoning changes.

SummaryTitle Insurance

» Owner's policy» Mortgagee's policy» Title report» Standard coverage» Extended coverage» Homeowner’s coverage

Elaine

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It's important to note that certain types of problems are not covered by any type of coverage.