California Real Estate Law Principles

American Advantage Law Group 3848 Campus Dr. Suite #206 Newport Beach, CA 92660 P - 949-863-1888 F - 949-863-1888

Disclaimer
The materials available at this web site are for

informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between American Advantage Law Group and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.

Who regulates conduct of real estate agents?

In California: The Real Estate Law Court Decisions Department of Real Estate Regulations of the Real Estate Commissioner

The Real Estate Law

Division 4, Business and Professions Code Part 1 covers licensing Part 2 covers transactions and includes Subdivided Lands Law
Regulations of the Real Estate Commissioner clarify and interpret the Real Estate Law

Department of Real Estate

Real Estate Commissioner appointed by the Governor Real Estate Advisory Commission appointed by the Commissioner Six members--licensed California real estate brokers Four members--nonlicensed members of the public

Real estate brokerage

Business in which real estate license-related activities are performed under supervision of a licensed real estate broker Corporate brokerage must have designated brokerofficer

Broker/Salesperson relationship
Under the Real Estate Law, the salesperson is always considered the employee of the broker Salesperson can do business only as an employee of a broker

Who doesnt need a real estate license?

Person dealing with their own property
Corporation acting through regular officers Licensed securities broker or dealer in sale, lease or exchange of

business opportunity Holder of power of attorney from property owner Attorney at law acting as an attorney Receiver, bankruptcy trustee or person under court order Trustee selling under deed of trust Employees of lending institutions, pension trusts, credit unions or insurance companies, in connection with loans secured by real property or a business Escrow agents collecting funds in connection with loans secured by liens on real property, when funds are deposited in escrow agents trust account

Real estate broker

At least 18 years old

Honest and truthful

Completed eight college-level courses Fulfilled experience requirement Passed brokers licensing exam Sent in required fee Completed 45 hours CE every four years Obeys applicable laws and regulations

Real estate salesperson

At least 18 years old Honest and truthful Passed course in Real Estate Principles Passed salespersons licensing exam Employed by real estate broker

Paid required license fee

Must complete two more courses within 18

months Must complete 45 hours of CE every four years Obeys applicable laws and regulations

Major real estate trade associations

California Association of Realtors California Association of Real Estate Brokers California Mortgage Association California Association of Mortgage Brokers California Association of Business Brokers California Mortgage Bankers Association California Building Industry Association California Association of Community Managers

Historical perspective
Native Americans Balboa and conquistadores1513 Missions Presidios Pueblos Mexican independence1822 California possession of Mexico Treaty of Guadalupe Hidalgo1848 California possession of U.S. California becomes a state1850

California today
Land ownership Federal 45% State 2% Local 2% Private 51% Population more than 33 million, with 97% in metropolitan areas

Real property
Bundle of Rights: Right of Possession Right to control propertys use Right to exclude others Right to dispose of the property Real estate can be explored, willed, mortgaged, encumbered, leased, traded, exchanged, given away

Definition of real estate

In California, real estate is the same as real property and includes: 1. Land 2. Fixtures to land 3. Anything incidental or appurtenant to land 4. Anything immovable by law

Fixtures
A fixture is anything attached (affixed) to land Tests for a fixture: Method of attachment Adaptability Relationship of parties Intent in placing on land Agreement of parties

Land description
To avoid confusion in describing a parcel of land, use: Legal description APNassessors parcel number and Street address

Methods of legal description of land

Lot and block system
also called subdivision system

Rectangular survey system

also called section and township system U.S. government survey system

Metes and bounds

Survey system in California

Principal base lines and meridians: Humboldt Mt. Diablo San Bernardino Township = 36 sections Section = 1 sq. mile = 640 acres Acre = 43,560 sq. ft.

Townships
36 square miles
Townships run

north south

in tiers (think wedding cake tiers)

east west in ranges

Estates in Land
Fee simple estate Fee simple absolute Fee simple qualified Life estate Reversion returns property to original owner when life estate ends Estate in remainder transfers property to someone else when the life estate ends

Taking title to real estate

Grantor conveys title by grant deed to grantee, who is identified as one of these: Single (never married) Married Unmarried (divorced) Widow Widower

Forms of ownership
Ownership in severalty is ownership by one person. It is also called...
Separate

ownership Sole ownership

Concurrent ownership
Ownership by more than one person can be: Tenancy in common Unity of possession Joint tenancy Unity of time Unity of title Unity of interest Unity of possession

Concurrent ownership (cont.)

Community property Quasi-community property is property acquired by an out-of-state married person (or California real estate acquired in exchange for real or personal property located anywhere) that would be community property if acquired by a California resident Tenancy in partnership

Business ownership of real estate

Sole proprietorship Corporation

For-profit is owned by shareholders Nonprofit is owned by members Domestic if incorporated in California Foreign if incorporated elsewhere S corporation offers tax advantages
A corporation can limit liability of officers, directors and

shareholders

Business ownership (cont.)

TrustTitle is conveyed by trustor to trustee

for benefit of beneficiary

Real Estate Investment Trust (REIT):
Regulated by Commissioner of Corporations

Must comply with federal and state tax law

Must be owned by at least 100 different investors Cannot have five investors own more than 50% of trust Must receive at least 95% of income from investments Must receive at least 75% of investment income from real estate

Living trust

Business ownership (cont.)

Limited partnership Real estate syndicate
REIT, corporation, general partnership or other

entity
Limited liability company (LLC)

Information on the Web

Secretary of State Business Service Center

www.ss.ca.gov/business/business/htm

How real estate may be acquired

By succession or will
dying with a will = testate dying without a will = intestate

By accession
improvements accretion reliction

By occupancy
adverse possession prescription

By transfer
public or private grant or other means

California Law of Intestate Succession

Community property

If spouse survives:
already belongs to surviving spouse Remaining goes to surviving spouse

Separate property
To surviving spouse, children (if any), and other next provided by California law If no heirs are located, property escheats to state of kin as

Acquisition by accession
Improvements may increase property Land adjacent to flowing body of water can be increased by accretion New soil is called alluvion or alluvium Soil may be lost by avulsion Reliction occurs when soil is uncovered as waters recede

Acquisition by occupancy
Adverse possession requires use to be: Open Notorious Continuous Hostile Adverse to interests of real owner
Adverse user must pay property taxes for at least five years of the possession

Acquisition by transfer
Private grant

Public grant
Public dedication
Common law Statutory

Operation of law or by a court

Action to quiet title Partition action Power of sale Judicial foreclosure action Action for declaratory relief

Acquisition by transfer (cont.)

Execution sale

Forfeiture
Bankruptcy Marriage Escheat Eminent domain Equitable Estoppel

Elements of a valid deed

1.

2.
3. 4.

5.
6. 7.

In writing Description of parties Grantor legally capable Description of property Granting clause Signed by grantor(s) Delivered to grantee and accepted by grantee

Acknowledgment and recording

Document is executed when signed. Acknowledgment is a declaration that execution

is declarants own act. California-licensed notary public may take acknowledgment anywhere in the state. Recording must be done in the county where the property is located. Chain of title contains all instruments in propertys recorded history.

Types of deeds
Grant deedimplied warranties Gift deed Quitclaim deed Warranty deed Trust deed Reconveyance deed Sheriffs deed Tax deed

Encumbrances
An encumbrance is anything that affects or limits the fee simple title to real estate or affects the propertys condition or use. Marketable title may be defeated by a cloud on the title.

Liens
Voluntary = Agreed to by owner Involuntary = Imposed without owners consent Specific = On named property only General = On all nonexempt property owned

Mechanics lien is available to any of the following employed by owner or owners agent:
mechanics, material suppliers, contractors, subcontractors, equipment lessors, artisans, builders, architects, registered engineers, licensed land surveyors, machinists, teamsters, laborers, and union trust fund

Mechanics lien
Preliminary notice should be made within 20 days from the time work begins Starting time of work determines priority of lien claimants Completion time occurs when:
work stops and owner (or agent) occupies or uses improvement; owner (or agent) accepts work; work has stopped for 60 continuous days; or owner files notice of cessation and work has stopped for 30

continuous days.

Mechanics lien (cont.)

Notice of completion may be filed by owner within 10 days after completion of improvement. Filing time for mechanics lien:
by original contractor of all or part of job, within 60 days after

filing of notice of completion; by any other claimant, within 30 days after filing of notice of completion; or within 90 days after completion, if a notice of completion was not filed.

Mechanics lien (cont.)

If a mechanic terminates a lien voluntarily, a release of lien should be filed. Lien release bond allows owner or other party to stop foreclosure of lien if validity is disputed. Notice of nonresponsibility must be posted within 10 days of owners knowledge of unauthorized work.

Legal process
Attachment allows the court to take possession of defendants assets. Judgment of court is its determination of rights of parties. Final judgment becomes a lien on the property of the judgment debtor after recording of the abstract of judgment. Writ of execution from the court directs the sheriff to sell nonexempt property of debtor to pay judgment debt. Discharge follows satisfaction of debt. Notice of satisfaction should be filed.

Bankruptcy
Federal court proceeding Trustee in bankruptcy
holds title to debtors assets liquidates assets if necessary

to pay creditors.

Easement
Easement is the right to use the land of another. Dominant tenement benefits from easement. Servient tenement is land over which easement lies. Easement appurtenant runs with the land Easement in gross belongs to an individual.

Creation of Easement
By contract

By express grant from owner of easement

property By reserving an easement over land that is transferred By implication of law By long use By condemnation By prescription

Termination of easement
Express agreement of parties

Lawsuit
Abandonment (nonuse) of prescriptive

easement Estoppel Merger of dominant and servient tenements Destruction of servient tenement Adverse possession Excessive use

Restrictions
CC&Rs
Conditions, Covenants and Restrictions Usually found in declaration of restrictions filed by subdivision developer Covenant is a promise to do or not do something Condition may be precedent or subsequent Restriction is prohibition against a use A condition cannot impose a restraint on alienationsomething that would prohibit the property from being transferred to a new owner.

Restrictions (cont.)
CC&Rs are terminated by:
Expiration of terms Voluntary cancellation Merger of ownership Governmental act Change in condition that warrants court action

to remove the restriction

Other limitations on property use

Zoningact of city or county Encroachmentpart of an improvement extends over a boundary line

Homesteadexemption from creditor claims

Homeowner $ 50,000 Homeowner/family unit 75,000 Homeowner/spouse 65 125,000 Homeowner/spouse disabled and unemployable 125,000 Homeowner 55, low income 125,000

American Advantage Law Group

3848 Campus Dr. Suite #206

Newport Beach, CA 92660 949-863-1888 (phone) 949-863-1888 (fax) americanlawfirm411@gmail.com

Real estate seminars held 1 PM PST every

Wednesday

Disclaimer
The materials available at this web site are for

informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this Web site or any of the e-mail links contained within the site do not create an attorney-client relationship between American Advantage Law Group and the user or browser. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney.