Title Ownership in California

California real property law is explored, focusing on title ownership, including separate and concurrent ownership (tenancy in common, joint tenancy, community property, and tenancy in partnership). The text details recording statutes and their impact on constructive notice, prioritizing recorded instruments while acknowledging exceptions like actual notice and physical inspection. Furthermore, it extensively examines mechanics’ liens, their creation, priority, and enforcement, alongside other encumbrances like easements, restrictions, and homestead exemptions. Finally, it discusses methods of assuring marketable title, from abstracting and certificate of title to the prevalent use of title insurance and the now-repealed Torrens system.

Real Property Title and Ownership in California: FAQ

1. What is the difference between actual and constructive notice in real estate transactions?

Actual notice refers to direct knowledge of a fact, such as being told about an existing agreement regarding the property. Constructive notice, on the other hand, is knowledge presumed by law, specifically through the public record of documents related to the property. This means that individuals are expected to be aware of the contents of recorded instruments.

2. What types of documents can be recorded to affect real property title in California?

California’s Recording Act allows for the recording of any acknowledged instrument or judgment that impacts the title to or possession of real property. These “instruments” include:

• Deeds: Documents transferring ownership rights.
• Mortgages and Deeds of Trust: Documents securing loans with real estate.
• Leases: Agreements granting the right to use property for a specific time.
• Land Contracts: Agreements for the purchase of land over time.
• Agreements between Landowners: Contracts establishing rights and obligations between property owners.

3. How do recording laws protect innocent parties in real estate transactions?

Recording laws prioritize interests in real estate based on the date of recording. This means that a later recorded interest will generally be subordinate to an earlier recorded interest, unless the party with the later interest had actual notice of the earlier, unrecorded interest. This encourages prompt recording and protects those who diligently check the public records.

However, the recording laws do not protect parties who engage in fraud.

4. What are some special situations where lien priority might not be determined solely by recording date?

There are specific cases where the priority of liens is not strictly determined by recording date. Two examples are:

• Future Advances: In loan agreements with provisions for future advances, these advances might be “obligatory” or “optional.” Obligatory advances maintain the priority of the original loan, regardless of intervening liens. Optional advances, however, usually have priority only from the time they are made, unless the lender can demonstrate lack of notice of intervening liens.
• Concurrent Deeds of Trust: Multiple deeds of trust recorded simultaneously can include clauses specifying their priority order. These recitals can function as subordination agreements.

5. What are the main types of concurrent ownership of real estate in California?

Concurrent ownership, or co-ownership, involves simultaneous ownership by multiple individuals. California recognizes three primary forms of concurrent ownership:

• Tenancy in Common: Each owner holds an undivided interest in the property, with rights to possess the entire property. There is no right of survivorship, meaning upon death, the deceased owner’s interest passes to their heirs or according to their will.
• Joint Tenancy: Characterized by the “four unities” (interest, title, time, and possession) with the key feature being the right of survivorship. When one joint tenant dies, their interest automatically transfers to the surviving joint tenant(s).
• Community Property: Applies to married couples in California and covers most assets acquired during the marriage. Each spouse has equal ownership of community property.

6. What is a mechanic’s lien and how does it work?

A mechanic’s lien is a legal claim against real property filed by individuals who have provided labor, materials, or services for the improvement of that property and have not been paid. This is a powerful tool for contractors, subcontractors, and material suppliers to secure payment for their work.

The process involves providing a preliminary 20-day notice to relevant parties (owner, contractor, lender), followed by recording a claim of lien if payment is not received. Ultimately, the lien can be enforced through a foreclosure sale of the property to satisfy the debt.

7. What types of easements exist in California?

Easements grant specific rights to use another person’s land for a particular purpose. The two main categories are:

• Easements Appurtenant: These easements benefit a specific piece of land (the “dominant tenement”) and run with the land, meaning they transfer with ownership. Examples include rights of way for access or utility easements.
• Easements in Gross: These easements are not tied to a specific property but belong to a particular individual or entity, such as utility companies having easements to place power lines across various properties.

8. What is a homestead exemption and how does it protect homeowners?

The homestead exemption in California offers a level of protection for a homeowner’s primary residence from certain creditors. It sets a limit on the amount of equity in a home that can be seized to satisfy judgments for debts.

There are two types of homestead exemptions: automatic (Article 4) and declared (Article 5). Automatic exemptions apply without filing but have lower limits. Declared exemptions require filing a declaration with the county recorder and generally provide higher protection levels.