Graphic Summaries Quizzeschabot-classes.wdfiles.com/local--files/law-class/Lesson_10.pdf · Requirements for a Valid Deed Legally competent : grantor must be of sound mind and at

Printable Lesson Materials

13218 NE 20th Street Bellevue, WA 98005 425-747-7272 800-221-9347 www.rockwellinstitute.com

Print these materials as a study guide

This portion of your printable materials consists of dozens of

frames that summarize the content in this lesson. The frames are

arranged on the page to make it easy for you to study the material

and add your own notes from your textbook or the online course.

Graphic Summaries

Many students learn best from sets of questions, and this multiple choice quiz allows you to focus your review of the material to important topics.

Quizzes

These printable materials allow you to study away from your computer, which many students find beneficial. These materials consist of two parts: graphic summaries of the content and a multiple choice quiz.

© 2009 Rockwell Institute

1

California Real Estate Law

© Copyright 2007 Rockwell Publishing, Inc.

Lesson 10:Transfer of Real Property


Introduction

This lesson will discuss:

l requirements for a valid deed

l types of deeds

l wills

l trusts

l involuntary transfers


Title

Person who owns property has title to it.

Transfer of title from one owner to another may be:

l voluntary: intentional act by owner

l involuntary: without action by owner and/or against owner’s will

2


Deeds

Ownership of real property begins with government.

Title passes from government to private party through document called patent.

l U.S. government once sold patents very cheaply (or gave land away for free) to encourage settlement.

Government patents


Deeds

Transfers between private parties occurs by deed.

Deed: legal document in which owner (grantor) transfers property interest to another (grantee)

l transfer by deed often called conveyance

Transfers after patents


Deeds

To be valid, a deed must:

l be in writing

l contain words of conveyance

l include adequate description of the property

l be signed by competent grantor

l specify identifiable grantee

l be delivered to the grantee

l be accepted by the grantee

Requirements for a valid deed

3


Requirements for a Valid Deed

Any transfer of a real property interest must be in writing.

l exception: lease for less than one year

Writing



Deed must contain language (called granting clause) that actually conveys property to new owner.

l examples: “convey,” “transfer,” “sell,” “grant”

l granting clause must express intent to transfer ownership of interest

Words of conveyance



Deed must contain legally adequate description of the property being transferred.

l description is adequate if it’s possible to identify and locate property

Property description

4



Legally competent: grantor must be of sound mind and at least 18 years old

l exception: emancipated minor can deed property

l deed signed by incompetent grantor may be void or voidable, depending on circumstances

Competent grantor



Grantor must sign deed.

l Illiterate or disabled grantor may use mark, if someone else witnesses and signs.

l Deed for community property must have signatures of both spouses.

Competent grantor’s signature


Competent Grantor’s Signature

Grantee doesn’t need to sign deed.

In CA, married grantees taking title as community property with right of survivorship must sign deed.

l to make sure grantees really want that form of ownership

Grantee’s signature

5



When corporation property is transferred in ordinary course of business:

l deed must be signed by corporate officers who have been authorized by board of directors

l shareholder approval usually not required, unless all or most of corporation’s assets are transferred

Signing by business entities



When partnership property is transferred in ordinary course of business, any general partner has authority to sign deed.

l If transfer is not in ordinary course of business, signing partner must have authorization of other owners.

Similar rules for LLC.

Signing by business entities



Person may give another person the authority to sign on her behalf, using written power of attorney.

l person receiving power of attorney is called attorney in fact

l creates agency relationship

l attorney in fact doesn’t need to be lawyer

When attorney in fact signs document on behalf of principal, principal’s name must come first.

Power of attorney

6



When attorney in fact signs document on behalf of principal, principal’s name must come first.

Example:

Phillip K. Montague III

by Gary Booth, his Attorney in Fact

Power of attorney



Most powers of attorney are general, giving agent broad powers.

Limited power of attorney: authority to sign is limited to specific documents

Buyer/grantee should make sure power of attorney is valid at time of conveyance.

Power of attorney



Deed or other documents can’t be recorded unless signatures are acknowledged.

Acknowledgment: signer declares to official witness that signature is voluntary

l most people use notary public, but other officials may take acknowledgments

l notary public can’t take acknowledgement if he is also grantee (conflict of interest)

Acknowledgment

7



Deed without acknowledged signature is still valid between grantor and grantee.

l but deed can’t be recorded

l third parties won’t have constructive notice of grantee’s interest in property

Acknowledgment



Grantee must be identifiable.

l misspelled names won’t invalidate transfer as long as it’s clear who parties are

l grantee doesn’t need to be competent

l legal entities validly formed under state law can be grantees

Identifiable grantee



After signing and acknowledging, grantor (or his agent) must physically deliver deed to grantee (or her agent).

Grantor must also have intent to transfer title (donative intent).

l physical delivery usually shows donative intent, but not always

Delivery and donative intent

8


Delivery and Donative Intent

Grantor must be alive at time of delivery.

l grantor can’t create deed with instructions for delivery after death

Living grantor



Acceptance by grantee usually isn’t an issue.

l but sometimes it’s better to refuse acceptance (example: if property is financial burden)

l only living grantee can accept deed

Acceptance


Optional Information

Deeds often contain optional elements:

l date

l habendum clause (“to have and to hold”) that names type of interest conveyed

l if multiple grantees, form of co-ownership (default is tenancy in common)

l recital of consideration (to help ensure property not subject to grantor’s creditors)

Deeds

9


Types of Deeds

l Grant deed

l Quitclaim deed

l Deeds by officials and semi-officials

l Warranty deeds

l After-acquired title


Types of Deeds

In grant deed, grantor warrants:

l he hasn’t previously conveyed title to another

l he hasn’t caused or allowed any encumbrances to attach to the property, other than what’s already disclosed in deed

These warranties always apply.

Grant deed is most commonly used deed in CA.

Grant deed


Types of Deeds

Quitclaim deed: conveys whatever interest grantor has and nothing more

l no warranties

l means nothing if grantor has no interest in property

Words like “grant” or “convey” should be avoided; words like “release” or “quitclaim” should be used.

Quitclaim deed

10


Types of Deeds

Quitclaim deed used:

l when making gifts

l to cure clouds on title: potential claims/problems with ownership

l to correct minor flaws in earlier conveyances, such as misspelling (called reformation deed)

Quitclaim deed


Types of Deeds

Deeds issued by officials or semi-officials also contain no warranties.

l sheriff’s deed used in execution sale

l trustee’s deed used in foreclosure sale

l personal representative deed used by executor in probate

Deeds by officials and semi-officials


Types of Deeds

Many states use warranty deeds instead of grant deeds ? provide more protection for buyer

l grantor warrants if title fails from defects originating before or during grantor’s ownership, she’ll reimburse buyer for any losses

However, title insurance policies have made deed warranty issues moot.

Warranty deeds

11


Types of Deeds

Sometimes grantor signs grant deed even though he has less than complete title.

After-acquired title: if grantor later acquires rights previously lacked, those rights are automatically owned by grantee

l after-acquired title usually doesn’t apply to quitclaim deeds

After-acquired title

Summary


DeedsÄ

l Title

l Valid deeds

l Acknowledgment

l Power of attorney

l Warranty deed

l Quitclaim deed

l Grant deed

l After-acquired title


Transfer of Property After Death

Ways to transfer property after death:

l wills

l living trusts

l community property agreements

l intestate succession

l escheat

12


Transfer of Property After Death

Testator: person making a will

l bequeaths personal property in a bequestto a legatee

l devises real property in a devise to a devisee

Today, CA uses “devise” for all property distributed by will.

Wills


Wills

Executor: carries out the will through probate

When testator dies, executor files will in court, and carries out any devises.

l this process is called probate

Executor


Wills

A valid will must be:

l in writing

l signed by competent testator 18 years or older

l attested to by two or more competent witnesses

Requirements for a valid will

13


Requirements for a Valid Will

Wills must be in writing.

Oral (nuncupative) wills invalid in CA.

Writing



Will must be signed by testator.

l testator can use a mark if someone else witnesses and signs (must be someone other than witness to will)

l person acting for testator may sign at testator’s request and in testator’s presence; must make notation that he’s signing at testator’s request

Signed



Testator must be at least 18 and understand:

l what the will accomplishes

l nature and extent of his property

l who the members of his family are and whose interests are affected by the terms of will

If the testator understands these things, he has testamentary capacity.

Competent testator

14


Competent Testator

If testator was incompetent when will was signed, will is invalid.

Law presumes testator is competent.

l evidence of incompetence must be clear, cogent, and convincing

l feebleness, forgetfulness, eccentricity aren’t enough

Competency



CA requires will to be signed by at least two witnesses, in testator’s presence.

Witness:

l may be any competent adult

l must be able to show she knew testator was signing a will and that testator signed or acknowledged signature as his own

Witnessed


Witness to a Will

Beneficiary shouldn’t act as witness.

l If witness is beneficiary, he won’t receive assets as provided in will.

l Instead, he’ll receive assets as if testator had died intestate.

Intestate: when person dies without a will

Beneficiary as witness

15


Witness to a Will

Holographic will: will in testator’s own handwriting, signed and dated by testator

l CA allows unwitnessed holographic wills.

l Testators with holographic wills often create provisions that are difficult to interpret.

l Probate court will ignore any typewritten/pre-printed provisions, except for statements of general testamentary intent.

Holographic wills



If a will is made in another state and is valid under that state’s laws, CA will recognize it as valid even if it doesn’t meet CA’s requirements.

l recognition because of Constitution’s Full Faith and Credit Clause

Exception for foreign wills



CA Probate Code provides basic will form for people without estate tax issues or other complexities.

l written in simple language, helps testator through steps of making the will

l still requires 2 competent witnesses

CA’s statutory will

16



Indicators of testator’s intent to revoke a will:

l burning, tearing, or otherwise destroying it

l making newer will that revokes older one

l making newer will that is inconsistent with older one (only revokes inconsistent provisions)

Also, divorce (but not separation) automatically revokes any will provisions regarding testator’s ex-spouse.

Revoking a will



After testator’s death, executor files will in probate court.

Court oversees distribution of property, according to terms of will.

l Executor makes distributions of real property using personal representative’s deed.

Estates under $100,000 can use simpler procedure, avoiding probate.

Probate

Summary


Wills

l Testator

l Executor

l Wills

l Holographic wills

l Beneficiaries

17


Trusts

Living trusts are second most common way of distributing property after death.

When creator of living trust dies, her property is distributed by trustee, according to terms of trust.

l courts play no role—probate avoided

Living trusts


Trusts

Trust is created when grantor or trustor signs document containing trust’s provisions.

l grantor’s signing doesn’t have to be witnessed

l if signature is notarized, document may be recorded after grantor’s death

l recording helps prove that any transfers of real property were consistent with trust’s terms

Signing


Trusts

Grantor usually names himself as initial trustee, so that he maintains control over property during his lifetime.

Alternate trustee is also named.

l becomes trustee if original trustee dies or is incapacitated

l distributes property according to trust’s terms, like executor of will

Trustee

18


Trusts

Grantor must fund trust by re-titling assets in trust’s name.

Trustee can’t distribute decedent’s property unless decedent put property into trust.

l grantor usually funds trust using quitclaim deed

l transfers to trust are exempt from CA documentary transfer tax

Funding


Trusts

Although living trust avoids probate, setting it up requires some effort.

l may also involve recording and other legal or professional fees

Experts recommend using backup will, in case grantor forgets to transfer some property into trust.

Fees


Trusts

Many living trusts are revocable.

Revocable trust: grantor can transfer any or all of the assets back to herself at any time

l assets in trust at time of grantor’s death are distributed according to trust’s terms

Using revocable living trust has little effect on an estate tax bill.

Revocable trust

19


Trusts

Irrevocable trust: once property is transferred into trust, grantor can’t get it back

l transfer into trust is permanent transfer out of grantor’s estate

l used by wealthy to lessen estates taxes

l grantor can’t be trustee of irrevocable trust

Irrevocable trust


Community Property Agreements

Third method of transferring property after death: community property agreement (CPA)

l used by spouses and registered domestic partners as substitute for will (avoids probate)

l typically provides that when one spouse dies, his interest becomes property of surviving spouse

l recorded after spouse’s death, to prove transfer of title (no deed necessary)


Intestate Succession

When someone dies without a valid will or will substitute, decedent’s property is distributed according to intestate succession law .

Basics

20



When someone dies intestate (without a will), court appoints administrator to distribute property according to statute.

l Administrator uses administrator’s deed to convey property.

Family members who receive property by intestate succession are heirs.

Probate court



When married person dies, community property goes to surviving spouse.

Separate property goes to:

l surviving spouse if decedent had no other family

l spouse and child equally, if one child

l spouse gets ? and children share remainder, if 2+ children

l spouse gets ½ and decedent’s other family members share remaining ½, if no children

Married person



l if no spouse, children share equally

l if no spouse and no children, decedent’s other family members share equally (parents, siblings, nieces, nephews, etc.)

Married person

21


Escheat

When someone dies intestate and no heirs appear within 2 years after death, decedent’s property escheats to state.

l escheat: state takes title to unclaimed property

l CA attorney general brings court action to vest title in state

l state can sell property 5 yrs after escheat, but rightful owner can claim proceeds any time

The state

Summary


Trusts, CPA, Intestate Succession

l Living trusts

l Trustee and trustor

l Irrevocable and revocable trusts

l Community property agreements

l Intestate succession

l Escheat


Involuntary Transfers

Most involuntary transfers of property result from court action:

l foreclosure

l partition

l quiet title

l condemnation

22


Court Action

Creditors with lien against property can force foreclosure sale of property to satisfy debt from proceeds.

l court orders sheriff to sell property at auction

l successful bidder receives sheriff’s deed

Foreclosure actions


Court Action

Co-owners who disagree on division of their property can file for partition.

l court can order property divided, or to be sold with proceeds split between co-owners

l referee conducts sale and uses referee’s deed

Partition actions


Court Action

Quiet title actions may result in transfer of title.

l adverse possession

l natural changes to land (accession)

Quiet title actions

23


Quiet Title Actions

Adverse possession: someone who occupies someone else’s land for certain period of time can acquire ownership

l most AP claims involve boundary issues with fences or outbuildings on neighbor’s land

l CA law: at least 5 years possession, with property taxes paid

l once requirements are met, adverse possessor can file quiet title action and secure court order declaring self as owner

Adverse possession


Quiet Title Actions

Accession: enlargement of land lying along river or body of water, by natural means

l includes accretion, avulsion, reliction

l owner can bring quiet title action to settle ownership of new land

Natural changes to land


Accession

Accretion: slow, gradual enlargement of riverside or lakeside property due to waterborne sand/soil

l owner of waterside property acquires title to new land

Reliction: slow, gradual enlargement of riverside or lakeside property due to retreat of water

l owner of waterside property acquires title to new land

Accretion

24


Accession

Avulsion: when moving water abruptly tears away land and deposits elsewhere

l original owner still has title to lost sand/soil if it can be claimed

l if unclaimed, it eventually becomes part of property where it was deposited

l rule applies to land exposed by abrupt change in river’s course

Avulsion


Court Action

When government determines it needs piece of property for public use, and owner won’t sell, government files condemnation action.

Condemnation:

l court hears expert testimony on property value, determines price

l court issues condemnation order and tells government to pay price to owner

l title transfers to government

Condemnation


Involuntary Transfer

Dedication: transfer of property to state without compensation

l may be voluntary or involuntary

l voluntary dedication: someone chooses to donate property to city/state by quitclaim deed—rare

Dedication

25


Dedication

Involuntary dedication is usually statutory dedication.

Statutory dedication: subdivision developer required to dedicate land for streets, sidewalks, etc. in exchange for development approval

l federal Constitution: dedication can be required only to mitigate negative impact from project

l no deed necessary; plat map or approvals specify that dedicated land is for public use

Statutory dedication


Dedication

If property owners allow regular public access to their property for at least 5 years, court may find implied dedication has occurred.

l also called common law dedication

l variant of adverse possession

l owners can protect themselves from inadvertent dedication by posting signs regularly along boundary

Common law dedication

Summary


Involuntary Transfers

l Foreclosure

l Partition

l Adverse possession

l Accession

l Condemnation

l Dedication

Legal Aspects of Real Estate Lesson 10 Cumulative Quiz

1. What is the name of the document the government uses to transfer property to a private party?

A. Grant deed B. Living trust C. Patent D. Quitclaim deed

2. All of the following are requirements of a valid deed except:

A. it must be in writing B. it must be signed by a competent grantee C. it must be signed by a competent grantor D. it must include words of conveyance

3. What is the name of the document that gives a person the authority to sign a deed (or other document) on another person's behalf?

A. Attorney at law B. Attorney in fact C. Irrevocable trust D. Power of attorney

4. A grantor must declare before a public official that her signing of a document is voluntary. This is known as:

A. acceptance B. acknowledgment C. delivery D. recording

5. In regards to a deed, which of the following would not be a valid form of delivery?

A. Giving the deed to the escrow agent B. Giving the deed to the grantee's guardian C. Giving the deed to the grantee's real estate agent D. Issuing instructions that the deed is to be delivered upon the grantor's death

6. A valid deed requires:

A. the signature date B. a habendum clause C. an adequate description of the property D. a statement of consideration

© 2009 Rockwell Publishing 1

7. Which type of deed is most commonly used to convey real property in California?

A. Grant deed B. Quitclaim deed C. Sheriff's deed D. Warranty deed

8. Which type of deed is most likely to be used to correct an existing deed after one of the co-owners changed her name after getting married?

A. Grant deed B. Quitclaim deed C. Sheriff's deed D. Warranty deed

9. Alice sold the mineral rights to her property. She later sold the property to Bill, using a grant deed. Alice then reacquired the mineral rights to that property, through a court order. The mineral rights automatically passed to Bill. This is an example of:

A. a cloud on title B. after-acquired title C. dedication D. equitable title

10. A person who receives real property through a will is known as a/an:

A. devisee B. executor C. legatee D. testator

11. Which of the following is not a requirement for a valid will in California?

A. A competent testator of at least 18 years old B. In writing C. A legal description of the property devised in the will D. Two or more witnesses

12. A will that is handwritten, signed, and dated by the testator, but not witnessed, is a:

A. holographic will, which is not valid in California B. holographic will, which is valid in California C. nuncupative will, which is not valid in California D. nuncupative will, which is valid in California


13. A will is filed by the executor in a superior court after the testator's death. What process does this begin?

A. Accession B. Escheat C. Intestate succession D. Probate

14. A living trust is:

A. always irrevocable and created in a will B. always irrevocable but never created in a will C. always revocable and created in a will D. sometimes revocable, but not created in a will

15. In California, a spouse may provide that his or her one-half interest in all community property will automatically transfer to the other spouse upon her death by using a:

A. community property agreement B. joint tenancy agreement C. living trust D. will

16. Someone other than the owner openly resides on a property for five years. She may be able to take title to the property through:

A. accession B. adverse possession C. condemnation D. dedication

17. New dry land next to a lake is exposed by the gradual retreat of the water line. The owner takes title to this land through:

A. accretion B. alluvium C. avulsion D. reliction

18. A married person with two children dies without a valid will. What happens to his community property?

A. It escheats to the state B. The spouse receives all of it C. The spouse receives half and each child receives one-quarter D. The spouse receives one-third and each child receives one-third


19. A government takes title to a portion of a private citizen's property, in order to widen a road. In return, the government pays the owner the fair market value of the land that was taken. This occurs through what type of legal action?

A. Condemnation B. Dedication C. Eminent domain D. Escheat

20. A developer must give land that he owns to the government as part of the subdivision permitting process. The land will be used for streets and sidewalks. This is known as:

A. adverse possession B. condemnation C. statutory dedication D. voluntary dedication


Documents

Graphic Summaries Quizzeschabot-classes.wdfiles.com/local--files/law-class/Lesson_10.pdf · Requirements for a Valid Deed Legally competent : grantor must be of sound mind and at