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In California, a Partition action is used to resolve disputes between property owners, and results in sale of the property or physical division. The most common result is a judicial sale of the property, made by a referee appointed by and accountable to the court. The referee is typically a licensed real estate broker. In a recent decision out of Nevada County, after the sale one of the co-owners sued the broker. The Court sided with the broker, finding that he was entitled to qualified judicial immunity. Quasi-Judicial-Immunity-attorney

In Holt v. Brock, (85 Cal. App. 5th 611 (2022), reh’g denied (Dec. 13, 2022), review denied (Mar. 15, 2023)) a brother and sister could not agree on what to do with an inherited house, so one filed for partition. Brock was appointed and the court ordered the parties to sign a listing agreement, the property to be sold “as is” with a listing price of at least $882,500, the actual listing price to be determined by the broker’s assessment of current market value.

The plaintiff offered to buy the property for $1 million if the broker reduced his commission to 3%. There is some dispute as to what happened, but after agreeing the broker decided he would not change the listing agreement. The house sold to the highest bidder for less than $1 million, and the plaintiff sued the broker. Judicial-Immunity-attorney

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An all-inclusive deed of trust (“AITD”) is used when the seller will be financing part of the selling price, and the buyer will also take subject to the existing deed of trust. The seller remains on the existing loan (and continues to make the payments) and finances the difference between the existing loan balance and the purchase price. But any transfer normally triggers the “due on sale” or acceleration clause, where the lender may foreclose, calling the entire loan due. Once the deed is recorded, the transfer is public record, and the Lender may catch it. But there is an exception in Federal Law which blocks lender action for a transfer to the spouse or children of the borrower. This becomes important where the original loan has a low interest rate, or the buyer is unable to qualify for a loan.

Due-on-Sale-attorneyAll-inclusive deeds of trust are used when the interest rate on the existing loan is much lower than the current prevailing rate, the rate of the wraparound can be lower than the [prevailing rate, and the seller still earns a spread between the rate he is paying and the rate that the buyer is paying to the seller.

The exception is part of the Garn–St Germain Depository Institutions Act of 1982, that deregulated savings and loan associations and allowed banks to provide adjustable-rate mortgage loans. More importantly for us, it prohibits lenders from exercising the due on sale clause in transfers between parents and children. There are some other exemptions set out at the end of this Blog.

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Sacramento-Merger-real-estate-attorneyThe Doctrine of Merger in California real property law provides that when a greater and lesser estate are vested in the same person, the lesser estate may merge into the greater estate and the lesser estate be terminated. A practical example is the case of an easement on one of the properties (the servient) for the benefit of the other property (the dominant). The easement is terminated when the same person acquires both the dominant and servient estates. But there are exceptions, as a troubled owner learned in a decision issued last November.

In Tariwala v Mack, Defendant Mack owned two adjacent properties at 2957 & 2949 Los Robles Road in Thousand Oaks. Lot 2957 (the Mack property) was in the front along the road, the other lot was in the back. A recorded easement over the Mack property provides the only access to 2949 (what later became the Plaintiff’s property)

Sacramento-real-estate-Merger-attorneyMack lost the rear property in foreclosure. Mack refused to move out of the house and remove garbage, inoperable vehicles, and other personal property, and the Bank had to evict him. The bank eventually sold it to the Plaintiffs. Mack denied an easement existed and refused Plaintiffs access over his property so they could begin clearing their lot and renovating the now-dilapidated house. They filed a lawsuit to confirm the easement, and for a preliminary injunction, which they received. Mac violated the injunction and was found in contempt twice. Mac lost at trial and appealed, claiming that the easement was extinguished when he owned both properties due to the doctrine of merger.

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Assessor’s Parcel Numbers are usually included in the legal description of a deed. But that does not always work; there are times when the APNs do not exactly describe the individual parcel. The assessor’s office does not necessarily follow the subdivision map in assigned APNs. Parties do not necessarily have the Assessors map to refer to and this leads to confusion in what is being conveyed (or insured by the title insurer!).

This may be why use of an APN in a summons published in a quiet title action is not sufficient. This problem was pointed out in a recent case where some deeds included a metes and bounds description (Metes and bounds are the boundaries of a parcel of real estate that identified by its natural landmarks and measurements), plus APNs. The APN included area that is not within the metes and bounds description. One party said I own it all, and the other said no.

Assessors-parcel-number-attorneyIn XPO Logistics Freight, Inc. v. Hayward Property, LLC, a large property was subdivided into four parcels in a recorded parcel map. But before that, the County Assessor divided the property for (tax purposes) into three parcels with separate APNs shown on an unrecorded assessor’s map. As three numbers were tacked onto four parcels, using an APN does not identify a specific subdivided lot. There were a number of subsequent transactions, resulting in a dispute about what was actually conveyed. Some legal descriptions of the property conveyed included a metes and bounds description plus APNs.

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Easements for road purposes are common in California. But what happens when the width of the granted easement is far greater than the road actually used by the easement holder? In a decision out of Napa the court held that a deed granting a nonexclusive easement of a specified width does not, as a matter of law, give the owner of the dominant tenement the right to use every portion of the easement; the owner has a right to place improvements on the easement as long as they don’t unreasonably interfere with the rights of the easement holder. But the court did not extinguish any part of the easesment.

Sacramento-unexclusive-easement-attorneyScruby is the owner of an acre of land and a single-family home at 7429 St. Helena Highway in Napa County, California. Grapevine owns and operates Cosentino Winery located at 7415 St. Helena Highway, consisting of 4 acres just south of Scruby’s property. The only access to Scruby’s landlocked property is over an easement on Grapevine’s property.

The problem deed states that Scruby is granted “[a] nonexclusive easement, 52 feet in width, for road and utility purposes.” The precise boundaries of the easement are set out in the deed by reference to a survey map and are generally described in this litigation as a 52-foot wide corridor from Highway 29 along the northern side of the winery property proceeding westward and ending in a cul-de-sac 100 feet in diameter.

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A Notice of Action, also known as Lis Pendens (Latin for “a suit pending”), may be recorded in a lawsuit that involves title to real property. Because this will prevent sale or refinancing of the property it attracts the defendant’s attention, and they want to remove (“expunge”) it from the record. Anyone seeking money damages can throw in a real property claim, and the courts have weeded them out by looking at the overall lawsuit and determining whether or not it was really just about money damages. If it was damages, the courts concluded that it did not contain a real property claim and expunged the notice. Sacramento real estate attorneys are well aware of the risk of an expungement action, because the prevailing party is entitled to be awarded their attorney fees. In a recent decision from Alameda the court clarified that, in a lawsuit with 7 causes of action for damages and one for constructive trust, the constructive trust claim falls squarely within the plain language of the statute: it “would, if meritorious, affect … title” to specific real property. They were entitled to record the lis pendens.

Sacramento-real-estate-attorneyIn Shoker v. Superior Court, Ghuman lured the Shokers into investing $1.5 million in an unidentified technology company. He became familiar with the real properties they owned (and rented for income), and then promised the Shokers returns far exceeding those that they were receiving on their rental properties.

The SCAM

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What if you had an easement to place roads across property to access your own, and you then developed your property into a shopping center. Could you include parking spaces in the easement area? A recent California decision points out the requirement to be clear in drafting easement language because only necessary incidental uses are included.

Sacramento-easement-attorneyIn Prune v City & County of San Francisco (67 CalApp 5th 61) the City of San Francisco sought eminent domain and obtained title in 1951 to an 80-foot strip of land to construct a Hetch Hetchy pipeline to construct an underground pipeline conveying water to San Francisco from the grandparents of plaintiffs. The deed reserved certain rights in the plaintiffs’ family’s favor, including among other things the right to use the surface of the property for pasturage and the right to construct roads and streets “over and across” the property “but not along in the direction of the City’s pipeline or lines.” Plaintiffs developed the property into a commercial center, and 75% of the pipeline property had been paved. To allow this development, in 1967 the City granted a revocable permit to use the pipeline property for additional parking and landscaping for a fee of $50 per month. Years later the City wanted to increase the permit fee from $50 to over $4,500, and this lawsuit resulted.

The Deed to the City contained two reservations, fully set out below. In summary,

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Sacramento-prescriptive-easement-attorneyUnder California real estate law a prescriptive easement requires the trespasser showing that they have used the property “for the statutory period of five years, which use has been (1) open and notorious; (2) continuous and uninterrupted; (3) hostile to the true owner; and (4) under claim of right.” The way a property owner cuts off a possible prescriptive easement is by filing a suit for trespass or ejectment. But an action for trespass is designed to protect possessory –not necessarily ownership– interests in land from unlawful interference. As the landlord does not have a right to possession during the lease term, he may not bring an action for trespass. The prescriptive right does not arise against an owner that had no possessory interest in the land during the five-year period. What happens when the owner has leased the property? The tenant has the right to possession, not the owner. It appears that, in California, even if the owner has a moment of possession, such as between leases, a prescriptive easement may be created.

In King v Wu, a neighbor poured a concrete driveway partly encroaching on the neighboring property. The strip of driveway on the neighboring property (prescriptive strip) is approximately eight inches wide and 90 feet long. Many years later the property suffering the trespass was sold, and the new owners began constructing a metal guardrail over the prescriptive strip. Three days later the Kings filed a complaint seeking to quiet title over the prescriptive strip.

Sacramento-prescriptive-easement-lawyerThe owners raised one defense—that the property had been “continuously rented out,” and thus, as landlords, they had never been in possession over a period of five continuous years, and could not have filed an action for trespass or ejectment during that time. The owners had several successive leases with different tenants.

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In quiet title actions a common defense is the statute of limitations – has the plaintiff waited too long to file suit? Generally, the clock does not run while the defendant is in “undisturbed possession.” But what that means is often disputed in these cases, and there are no bright line rules. In a recent decision from El Dorado County, a South Lake Tahoe landowner was disappointed to learn that recorded documents are not sufficient to ‘disturb possession’, and the claim was not barred by the statute of limitations.

Sacramento-quiet-title-attorneyIn Kumar v.Ramsey (71 Cal.App. 5th 1110) Walker sold property on Dundee Circle in the City of South Lake Tahoe, California, to Kohs, reserving for themselves 23,188 square feet of land coverage. Land coverage rights consist of the right to place manmade structures on a certain parcel of land. These rights may be transferred in whole or in part to other parcels, granting purchasers the ability to build structures on their properties. Applications to transfer coverage rights are reviewed by the Tahoe Regional Planning Agency (TRPA).

The property was lost to foreclosure and then bought by Plaintiff Kumar. Prior to purchasing the property, Kumar conducted a title search which revealed multiple transfers of portions of the reserved coverage from Walker and Kohs to third parties between 2006 and 2007. As a result of those transfers, a TRPA tracking sheet indicated that the reserved coverage had been reduced to 6,959 square feet before Kumar purchased the property. Kumar understood that when he purchased the property, his purchase included the remaining 6,959 square feet of reserved coverage.

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Outside reverse veil piercing differs from traditional veil piercing, which is permitted due to the “‘The alter ego doctrine prevents individuals or other corporations from misusing the corporate laws by the device of a sham corporate entity. Traditional veil-piercing permits a party to pierce the corporate or limited liability company (LLC) veil so that an individual shareholder [or LLC member] may be held personally liable for claims against the corporation [or LLC However reverse veil piercing, rather than seeking to hold an individual responsible for the acts of an entity, seeks to satisfy the debt of an individual through the assets of an entity of which the individual is an insider. Outside reverse veil piercing arises when the request for piercing comes from a third party outside the targeted business entity. In a recent decision out of SLO County, where the wrongdoer was the owner of an LLC that owned land in Cambria. The trial court amended a judgment against the wrongdoer to reverse veil pierce and add the LLC. Sacramento-reverse-veil-piercing-attorney

The trial court’s adding the nonparty alter ego to the judgment was an equitable procedure based on the theory that the court is not amending the judgment to add a new defendant but is merely inserting the correct name of the real defendant.

The wrongdoer appealed, arguing that a charging order under Corporations Code section 17705.03 provides the sole remedy available, but the courts state otherwise. [T]he key is whether the ends of justice require disregarding the separate nature of the LLC under the circumstances. In making that determination, the trial court should, at minimum, evaluate the same factors as are employed in a traditional veil piercing case, as well as whether the plaintiff has any plain, speedy, and adequate remedy at law. Outside reverse piercing is permissible in the context of a limited liability company because, unlike a corporation, a limited liability company does not issue shares on which a creditor may levy and creditors do not have sufficient alternative remedies at law.

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