Deeds and Real Property Transfer in California
Transferring Real Property: There are many different types of documents that affect the transfer of real property. The following are brief descriptions of some of the more common transfer documents:
The most commonly used type of deed in California is called a Grant Deed. A Grant Deed is a written instrument by which title to or an interest in real property is transferred from one person or legal entity (grantor) to another (grantee). A Grant Deed does not imply a good title in the grantor, and it does not imply an absence of encumbrances on the estate conveyed. The term “encumbrances” includes taxes, assessments, and all liens on real property; therefore, the accurate listing of all current encumbrances is a necessary protection for both parties.
A Quitclaim Deed is usually used to release special interests in land such as oil, mineral or gas leases rather than convey the real property itself. There is no warranty or implied covenants as to the title or as to the freedom from encumbrances. The Quitclaim Deed uses wording such as “…do hereby remise, release, and forever quitclaim to…” rather than the unqualified “grant(s),” as used in the Grant Deed. The Quitclaim Deed is often used to clear a “cloud on the title” or to relinquish a possible legal interest held by the grantor. Make certain this is the right deed for what you wish to accomplish.
This deed transfers an interest in real property between a husband and wife only (and former spouses). Interspousal Transfer Deeds are usually used in conjunction with the dissolution of a marriage, or upon marriage, when adding a new spouse to one’s title. This deed contains language regarding interspousal transfers under the Revenue and Taxation Code and exclusion from reappraisal under Proposition 13.
This deed transfers an owner’s interest in their residential real property (with certain limitations) upon the death of the property owner to named beneficiaries. As of January 1, 2016, a new California law allows the recording of transfer on death (TOD) deeds for certain types of real property. The transfer does not become final until the death of the transferor. Using a Transfer on Death Deed allows an individual to transfer their real property to a beneficiary without having to set up a trust or some type of probate proceeding. More detailed information about the new California transfer on Death Deed can be found here.
This deed transfers an interest in real property between two people registered as domestic partners with the State of California. Real estate transfers between registered domestic partners no longer trigger a reassessment of the property for state property tax purposes. (This exemption from reassessment is already available to married couples.) For example, if a homeowner registers as a domestic partner with his same-sex partner and then adds that new partner to the deed as a co-owner, the county tax assessor will not reassess the value of the house (Cal. Rev. & Tax. Code sec. 62(p)).
A trust transfer deed is used to transfer property to a revocable trust, a short-term trust not exceeding 12 years, a trust where the trustor or the trustor’s spouse is the sole beneficiary, a change to trustee holding title, or transfer from trust to trustor or trustor’s spouse where prior transfer to trust was excluded from reappraisal and for a valuable consideration. This deed should also contain language citing the Revenue and Taxation Code and exclusion from reappraisal under Proposition 13.
Warranty deeds are used all over the United States but are more common to the Midwest and Eastern states. Warranty deeds are very similar to grant deeds with one main exception: Grant deeds contain two guarantees but warranty deeds contain three guarantees:
- The grantor states that the property has not been sold to anybody else.
- The grantor states that the property is not burdened by any encumbrances apart from those the seller has already told the buyer about.
- The grantor will warrant and defend title against the claims of all persons. This means the grantor is guaranteeing the grantee that title is free of any defects that may affect the title, even if the defect was caused by a prior owner.
A Deed of Trust is used by a borrower (trustor) to convey “bare legal” title to the subject property to a neutral party (trustee) to secure an obligation (usually the payment of a promissory note) payable to a lender (beneficiary). The trustee (usually a corporation) gives instructions to issue a Deed of Reconveyance (when the obligation has been paid in full) or to begin foreclosure proceedings because the trustor is in default on the loan. The trustee is given a “power of sale” (non-judicial foreclosure) and proceeds from the Trustee’s Sale will apply as payment toward the defaulted obligation. These documents are also referred to as “mortgages” or “liens” and are recorded in the county where the property is located.
Upon the death of a person who was holding title to real property as a joint tenant, the surviving joint tenant(s) records an affidavit death of joint tenant to vest the deceased tenant’s interest in the surviving joint tenants (as of the time of death of the deceased). A complete property description is required as well as an attached certified copy of the death certificate of the decedent.
Only mobile homes that have been installed on a foundation are considered real property, and thus, can be transferred by deed. Mobile homes and manufactured houses that are not installed on a foundation approved by the California State Department of Housing and Community Development are transferred by a title document, similar to title to a car. When the mobile home is put on an approved foundation (building permit is required), a local agency issues a certificate of occupancy and records, with the County Recorder, a document stating that a mobile home has been affixed to real estate. The Department of Housing cancels the registration and the owner gives the certificate of title back to the Department. From then on, the mobile home is transferred by a deed to the land on which it is situated.
These are just some of the more common ways to acquire, hold and dispose of real estate in California. It is provided for informational purposes only and should not be relied upon for legal, financial or tax advice. Since there are significant legal and tax implications depending on how you choose to hold title to your real property, you should consult with an attorney before deciding how you will hold the title to California real estate.
Taking Title to Real Estate
In addition to selecting the type of real property transfer deed, a decision will also have to be made about how title to the property will be taken. There are several different ways to take title to real property which are discussed further here.