Articles Posted in deeds

In order for a deed to be effective in California, it must be “delivered” and “accepted.” These terms do not have their normal meanings in this context. Delivery does not mean the physical act of transmitting the deed to the grantee. Delivery refers to the intention of the grantor that the deed be presently operative, with the grantee immediately becoming the legal owner. Delivery can be inferred if the deed is recorded or is in the grantee’s possession. The deed also must be accepted, which again refers to the grantee’s intent. The grantee must have the intention to become the legal owner of the property. Usually, these issues do not come up, except in unusual circumstances in which a party to a deed should consult an experienced real estate attorney. Such an unusual case came up when deeds were prepared for a trust that had not been created. After the grantee’s death, the grantors’ heirs wanted the property back. The grantors’ heirs were disappointed to learn that, nonetheless, the deeds had been delivered and accepted, and the property was not theirs.

The sisters’ heirs filed this lawsuit claiming that the deed to the Trust was void because the trust did not exist when the deeds were signed and delivered to the Lawyer. The defendant argued that the sisters, when they signed the deeds, had the intent to return title to Al, either as an individual or as trustee of the trust.

Altered or forged deeds are subject to some specific rules in California. In some cases, where it is altered by a party to the deed, they may be declared void, and of no effect. If it is altered by a third party, it is not entirely void – it is still valid as between the original parties. In a recent decision, The person who should have been an owner of property did not consult a Sacramento real estate attorney, and misunderstood what a deed actually said. When it was improperly altered before recording, the result did not change the effect of the conveyance – she had no interest in the property.

Lin filed suit against River & Elevation for fraud, and also against Coronado, the buyer, to quiet title. Regarding the quiet title, she claimed that the deed was altered after it was executed, it was void, and thus did not convey title. The buyer claimed that Lin never had an interest in the title in the first place, so they were a bona fide purchaser for value, and the claim failed. The Court agreed with the buyer.

According to the California Legislature, the vast majority of joint tenancies in California are used as a will substitute among family members. In a joint tenancy, the survivor among the title holders “inherits” the property. This is different from holding the property as tenants in common, in which case each party owns a percentage interest in the property; if one passes, their percentage would go to the deceased person’s heirs. Real estate lawyers are reluctant to suggest joint tenancy because of the risks involved (though escrow officers suggest it). A joint tenancy requires a great amount of trust in the co-parties, because any joint tenant may sever the joint tenancy at any time by recording a deed. Thus, John Doe, joint tenant, could deed his interest to himself as John Doe, tenant in common, at any time, and the other owners of the property would never know. The result would be that the parties are no longer joint tenants, but are now tenants in common. Sacramento real estate attorneys commonly see this happen with estranged couples who bought property as joint tenants. One unexpected result of this problem surprised two Marin County brothers in a recent court case, when one brother deeded his interest to himself as tenant in common. This triggered reassessment, and they got hit with a huge tax bill.

Under Proposition 13 real property tax is based on “full cash value,” meaning “the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred. Generally, any sale or transfer of property results in a change of ownership.
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Al’s siblings were put on title to Al’s property so that it would pass to them if Al died. Al decided to create a trust, and have the trust be on title, so the siblings conveyed title back to Al, and Al conveyed the property to the trust. But, Al did not create the trust until 13 days later. The deed from Al to the trust was then recorded, and Al died shortly thereafter.

Al’s siblings claimed that the transfer to the trust was ineffective, because the deed was signed before the trust was created. The Court said it was effective, and the trust owned the property. The question has never appeared in a California published decision, so the court looked at the law in other states. It agreed with the general rule that a deed to a corporation made before its organization is valid between the parties, though void if asserted against third parties. It found that here, Al the individual granted the property to Al the trustee, anticipating the creation of the trust. Therefore, the deed was effective between them.

Luna v. Brownell (2010) 185 Cal.App. 4th 668.

Under California law, a Grant Deed contains two implied covenants- these are promises that are not written into the deed itself.

In deed language, the “grantor” is the person or entity who grants the property and signs the deed; the “grantee” is the one who receives the interest in the property.

First is the implied covenant that, prior to this deed, the grantor has not conveyed the same interest in the property to anyone else. In other words, I grant this property to you, and I guarantee that I have not already given it to someone else. It is not a guaranty that I have good title.

Despite the best intentions, sometimes deeds get altered by someone other than the person granting the property, before they are recorded. What is the effect of the deed, once it is recorded?

A recent California appellate decision addressed the issue in a case with unusual facts, this time dealing with a transaction between family members. George was facing a lawsuit and decided he should have his name taken off a Deed to California property by granting the property to his niece, F.S., the consideration being described as “gift.” (This conveyance was possibly fraudulent as to George’s creditors, who might have been able to have it invalidated, but that is another story) George and his niece lived in South Carolina, so he sent the deed to California to be recorded. (The record does not indicate whether he sent it to another relative in California, but given the family feud this decision describes, it sounds likely.)

Before it was recorded, the deed was altered by some unknown third person to add two grantees, in addition to F.S., to the deed. In the lawsuit, other family members who claimed they should be on title sought to have the deed voided, as it had been altered.