I recently got to diagnose a new case that I thought would really speak to some of my readers. A potential client (we’ll call him Mr. P) called me about a case where his wife had died and he believed he was inheriting a property as her will left him everything she had. Certainly everything she had would include a piece of real estate in Los Angeles that had been paying them rent money for years, right!?
During our first conversation I told him the first thing I have to do is check the title history to confirm how title is now held. I discovered a MESS! Fixing or amending a California probate court order is likely to come soon – let me explain….
Mr. P told me that his wife and her brother had owned this property for years together after their parents had died. However, his brother in law had died before his wife and he believed title was “held jointly.” Let’s quickly discuss the key with title ownership in California is whether title is held in “joint tenancy” or “tenancy in common.” A small percentage of properties are held in “community property” or “community property with rights of survivorship” but those can only be between spouses and that wasn’t the case here. Thus, is it JT or TIC?
The only way to answer the JT v. TIC question is to look at the actual deed. What does it say? Do NOT make a conclusion because “mom told me it was joint” or “I have seen it and both names were on it.” You should have a trained professional, such as an attorney, look at the deed. Also, you need to verify it’s the actual deed and NOT the “deed of trust” which is related to the mortgage and NOT the deed or ownership of the property. Ya, that’s confusing, huh!?
To be truly a joint tenant (and pass automatically to the survivor) it must say “as joint tenants” or “in joint tenancy.” In the old days, and perhaps in some states still, it must say “with the right of survivorship” but that is not required in California today. We are looking for words such as “in joint tenancy” or “as joint tenants” today. If those words aren’t there it is a TIC and thus no automatic transfer when one person dies.
Normally title is pretty clear. Let’s assume Mr. P’s wife was named Ann, her brother is Bob, and their dad was Daddy Don (or DD). So DD left the property to his kids Ann and Bob. What did that deed say? That was my first task and told Mr. P this. I told him before I can determine if a spousal property petition will work I need to confirm title. What did I find?
In this case the “deed” was a recorded probate court order from 1996. In probate cases the deed is actually a court order. This one is a doozey! It reads (with changes for privacy only)
“DD’s estate shall be distributed as follows: a life estate in the property located at 1234 Main Street in the city of Los Angeles, county of Los Angeles, state of California is distributed to Ann and Bob. The property is to be occupied by Bob without payment of rent or any charges. It may also be occupied by Ann, or her family, without payment of rent or any charges. The life tenant, or tenants, shall pay taxes and expenses of the property. If Ann or Bob desire to sell the property it must be mutually agreed upon between them. The remainder of the life estate is to be distributed to the survivor or their heirs.”
Ok, what do we have? In addition to myself I had two other Certified Specialist in estate planning, trust and probate law attorneys take a look. Each time I read it I come up with some new problem. Here is where I stand now with the problems. I see a number of problems that could have arisen while Ann and Bob were alive:
- Both Ann and Bob could occupy the property with no rules given;
- Ann’s family, which isn’t defined, could also occupy the property;
- Ann and Bob would have had to mutually agree to sell – there should have been a buy-sell agreement of some kind.
However, all of those potential issues are moot since Ann and Bob are deceased. However, I have one HUGE problem… I only see that a life estate was given. I thus think DD still owns the property now that Ann and Bob are deceased. A life estate is just that – a right to occupy during your life. In this case the court order specifically says “DD’s estate shall be distributed as follows: a life estate in the property located….” It mentions life another time and then concludes also by only talking about a life estate, “The remainder of the life estate is to be distributed to the survivor or their heirs.”
I thus believe that DD’s court order, which is probably written really horribly by the attorney that did it (someone I do not know in the Los Angeles area), did not actually give away the real estate. Or, as we learned in law school, the “fee simple” interest. That is the underlying actual OWNERSHIP of the property. The meat and potatoes.
Ok, but Ann, Bob and DD are deceased. How do we fix this mess? I am working on that now and will post more once I review the Los Angeles probate court file. That is my first step.