July 16th, 2020

E-recording is the process of submitting documents for recording online
and having them reviewed, recorded, and returned back to the submitter electronically.

California takes e-recording seriously.

The California Electronic Recording Delivery Act (ERDA) of 2004 requires the Attorney General to certify and provide oversight for any electronic recording delivery system being developed by a county. The Attorney General has established the ERDS Program within the Department of Justice, which is responsible for implementing the requirements of the law.


Affidavits of Death

July 14th, 2020

Deed and Record prepares and records affidavits of death for joint tenant owners and trusts. An ‘affidavit of death of joint tenant’ recognizes the death of a joint tenant owner and the identity of the surviving owner. An ‘affidavit of death of trustee’ recognizes the death of a trustee and the identity of the successor trustee.

Required Format for Deeds

July 13th, 2020

California GC Section 27361.6.

Except as otherwise provided by law or regulation, all documents submitted for recording shall have at least a 1/2-inch margin on the two vertical sides except in the space reserved for recording information. At least the top 21/2 inches of the first page or sheet shall be reserved for recording information. The left-hand 31/2 inches of the space shall be used by the public to show the name of the person requesting recording and the name and address to which the document is to be returned following recording.

E-notary Requirements

July 9th, 2020

When a signature is required to be accompanied by a notary’s seal or stamp, that requirement is satisfied if the electronic signature of the notary contains all of the following:

(1) The name of the notary.

(2) The words “Notary Public.”

(3) The name of the county where the bond and oath of office of the notary are filed.

(4) The sequential identification number assigned to the notary, if any.

(5) The sequential identification number assigned to the manufacturer or vendor of the notary’s physical or electronic seal, if any.

(g) This section shall remain in effect only until January 1, 2027, and as of that date is repealed.

Affidavit of Death

May 30th, 2020

Even though the right of survivorship is automatic, the public record maintained by the county recorder is not automatically updated. For the survivor to sell or borrow on the real property, an affidavit of death must be submitted to the county recorder by the survivor. If there is only one survivor, as is most often the situation, the survivor owns as an individual. On the death of the surviving owner, an action in probate court is required.

Joint Owners of Real Property in California

May 14th, 2020

Real property owned in a person’s name only requires transfer to heirs in probate court. Two or more individuals who own in their names only, are called tenants-in-common. A tenant-in-common owner requires transfer in probate court to his or her deceased heirs. Heirs are determined by California law or by will. The surviving co-owner may not be the heir and may have a new co-owner.

Co-owners can avoid probate on the death of the first owner with the magic words “as joint tenants.” Joint tenants have the right of survivorship. A surviving joint tenant owner inherits the deceased owner’s interest without probate court. If the phrase “as joint tenants” is missing the default is as tenants-in-common and transfer is in probate court.

Another of form of joint tenancy ownership in California is “as community property with the right of survivorship.” This right of survivorship is for married couples only. In addition to the right of survivorship, this phrase allows on the death of the first spouse, a full step-up in the basis of the real property to fair market value. Full step-up in basis may provide a reduction in capital gains tax on the subsequent sale of the real property.

Many states allow the right of survivorship with the phrase “as husband and wife.” This is not true in California. In California, the phrase “as husband and wife” does not provide the right of survivorship. The surviving spouse requires a court order from the probate court to inherit.

Revocable Transfer on Death Deed

May 5th, 2020

A revocable transfer on death deed is not really a form of ownership. The property remains owned by the individual. But this deed transfers on death without probate or a trust to the owner’s heirs as identified on the deed. California’s law that allows for this type of transfer is in a five-year test period. The law ends on January 1, 2021. A revocable transfer on death deed executed before January 1, 2021 will remain valid after January 1, 2021. Most likely this law will be extended for another five-year period or made permanent.

The major problem with this deed is title insurance is not available for three years after the death of the owner. Without title insurance the heir as the new owner will have difficulty selling this property and will have to wait for three years. Without title insurance the heir will have difficulty finding a lender for a period of three years.

How to Transfer California Real Property to Heirs

January 28th, 2020

How real property was owned and its market value are the two key variables that determine the time and cost to transfer a deceased owner’s real property.

First variable:

The options for owning are as an individual, as a co-owner, as a trust, as a business entity or as a revocable transfer on death deed. Real property owned by one individual requires assistance from the probate court. The amount of involvement by the probate court depends on the real property’s appraised fair market value as of date of death.

Second variable:

The final word on the appraised fair market value is determined by an individual with the bewildering title of “probate referee.” The probate referee is an Officer of the Court appointed by the California State Controller. The less the appraised value, the less involvement by the court. The break out is less than $50,000, $50,000 to $150,000 and over $150,000.

Deadline to Claim Property Tax Shelter for a Child’s Inherited California Real Property

January 28th, 2020

California imposes an annual tax based on fair market value of real property. Proposition 13 limits increases in the property tax base.  A change in ownership increases the tax base to current fair market value.  Proposition 58 excluded as a “change in ownership” Inherited real property by a child of the deceased.

Children include the following: sons and daughters, sons-in-law and daughters-in-law, stepchildren, and children adopted under 18. Source — California Revenue and Taxation Code Section 63.1

But the Proposition 58 exclusion requires the child to file paperwork with the county assessor. The exclusion is not automatic. An example of an automatic exclusion is transfers between spouses. The deadline to file begins from the date of death, not the date the child is the owner. Often there is a delay from the date of the parent’s death to the date the child receives the real property.

Fortunately, California has a pretty liberal deadline for the timely filing of a parent to child claim for exclusion. The deadline is different for retroactive application and prospective application. For retroactive application, or in other words to go back to the date of death, the claim must be filed within three years. The three years is extended by six months from the date of a notice of supplemental or escaped assessment.

Even if the child waited over three years and ignored the notice of supplemental or escaped assessment, the child still can obtain prospective (going forward) relief. Property tax for years prior to the filing will be at the current market value. But going forward after the claim is filed, the child’s property tax base will be the parent’s property tax base as of date of death.

The parent to child exclusion claim is limited to the parent’s primary residence and the first one million dollars of additional property owned by the parent. The parent-child exclusion does not include any business entity owner interest. If the parent’s real property was owned by a business entity, such as limited liability company, the real property base is the appraised value as of date of death. There is no Proposition 58 tax shelter for business entities.

The Sixth Sin of Gluttony

January 7th, 2020

The sixth sin is gluttony and undue influence. People will put off their estate planning until their later years. In the later years, objectivity is lost and dependency on others is created. Persons befriend the elderly in anticipation of a windfall at death. Heirs’ and friends’ gluttony for the elder’s assets only increase as the elder’s capacity decreases. Trusts and wills should be prepared while the elder has capacity. Subsequent changes should only be made judiciously when there is a substantial change in circumstance.