Community property and separate property (Ref 58; Fam C 1100, 760, 770)

The property community (Community property generally consists of all property acquired by a husband and wife, alone or together, during a valid marriage, except separate property.

The property separated (Separate property) includes:

• All property owned before marriage.
• All property acquired during the marriage by gift or inheritance.
• All rents, fruits and profits from separate property, as well as other property acquired with the proceeds from the sale of separate property.
• Earnings and accumulations of a spouse while living separate and apart from the other spouse.
• Earnings and accruals of each party after a separate judicial decree of maintenance.
• Property transferred by one spouse to the other with the intention that it be the separate property of the beneficiary.

Property held by spouses as joint tenants may be community property or separate property, depending on several factors.

Widow's and Widower's Rights (Dower and Curtesy)

Widow's and curtesy rights have been abolished by statute in California.

Lien theory vs. Title theory in California

CA Lien theory (Ref 62-63)

California is a "Lien theory” – CA Lien theory (Ref 62-63) instead of "Title theory"when liens are levied against the title to real property.

• Until 1933, California courts held that mortgages created "liens" and that the mortgages created "encumbrances. deeds of trust transferred "legal title".
• Since 1933, the California Supreme Court has ruled that a deeds of trust is the functional equivalent of a mortgage with power of sale.
• Both instruments are regulated by mortgage laws.

When it comes to real estate and mortgage financing, it is essential to understand the differences between title theory and lien theory. These concepts dictate who holds title to the property during the course of a mortgage. Let's delve into these two theories.

Title Theory States

In title theory states, banks or mortgage lenders hold title to property until paid in full. This means that, legally, the lender owns the property until the mortgage is paid off. The buyer, also known as the mortgagee, has equitable title and the right to possess the property, but legal title remains with the lender.

Lien Theory States

On the other hand, in lien theory states, banks or mortgage lenders they never retain title to property. Instead, The mortgage lender has a lien against the property. This lien is essentially a legal claim that serves as collateral for the loan. Although the lender has an interest in the property to secure payment of the mortgage, the title remains in the buyer's name.

Implications for Home Buyers

These theories have implications for home buyers. In the “Title Theory States”, if the buyer defaults on the mortgage, the lender can foreclose and take possession of the property without going to court. However, the buyer assumes more risk in these states because the lender has legal title.

In the “Lien Theory States”, if the buyer defaults, The lender must follow a judicial foreclosure process, which usually involves a court. This process provides greater protection to the buyer, since the lender has no immediate ownership rights.

Understand State Laws

It is critical that home buyers and property owners understand which theory their state follows, as these laws can vary. Although most states have leaned toward the theory of lien, some continue to use the theory of title. This knowledge can help buyers make informed decisions and understand their rights and responsibilities in a real estate transaction.

Lien Theory States:

• Arkansas
• California
• Connecticut
• Delaware
• Florida
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maine
• new Mexico
• New York
• North Dakota
• Ohio
• New Jersey
• Pennsylvania
• Puerto Rico
• South Carolina
• Wisconsin

Encumbrances and Land Use Controls

Lien Priority (Ref 53, 54, 64-70, 250; CC 2884, 2898, 3081.2-.3, 3082, 3134; GC 53930; R&TC 2192.1)

Mortgages and deeds of trust

• Those given for the price of real estate (purchase mortgages) have priority over all other liens created against the buyer, subject to registration laws.
• Those given for other purposes (mortgages not related to the purchase) do not have such priority.

Mechanics' liens

• They generally relate to the start of the construction work as a whole.
• If the construction work begins before it is executed, deliver, accept and register a deed of trust that guarantees a construction loanthe mechanics' lien shall take precedence over the deed of trust.

Tax liens

• Liens for real property taxes and other general taxes, as well as county and municipal excise taxes, have priority over all other liens, including judgments, deeds, mortgages, deed of trustetc.
• If they are valid liens/liens, the deed of trust and mortgages recorded prior to general federal tax liens or state tax liens have priority over these liens.

Easement by Prescription (Easement by Prescription) (Ref 72-73; CC 813, 1008))

Continuous and uninterrupted use during 5 years will create an easement by prescription when the use is hostile, adverse, public, notorious, exclusive and under some claim of right.

Generally, payment of property taxes is not required to establish an easement by prescription, although it is one of the requirements to establish adverse possession and ownership of the land or property.

obtaining a quitclaim deed may combine the concept of easement by implication with easement by prescription.

Let's break it down:

1. Quitclaim Deed: A quitclaim deed is a legal document used in real estate transactions that allows one person (the grantor) to relinquish or assign his or her rights or interest in a property to another person (the grantee or assignee). It is important to note that when a quitclaim deed is used, the grantor is not guaranteeing that he or she has valid or clear rights to the property, he or she is simply relinquishing any interest he or she may have.
2. Easement by Implication: An easement by implication is an easement that is presumed to exist by implication or necessity, usually because of the way a property has been historically used. This easement may arise when two properties are historically connected in a way that suggests the existence of a mutual right-of-way or use.
3. Easement by Prescription (Easement by Prescription): An easement by prescription is a type of easement that is acquired through the continuous and unopposed use of another person's property for a period of time specified by law. In essence, it is the right to use another person's property due to prolonged and constant use.

The phrase suggests that, by obtaining a quitclaim deed, it is possible that someone is giving up certain rights or interests in a property, which could include an existing easement, either by implication (due to the history of use of the property) or by prescription (due to long unopposed use). If a third party (the "stranger") is in the chain of title to the property (meaning they have a legitimate interest in the property), that disclaimer in the quitclaim deed could help establish or confirm the existence of an easement by implication or prescription.

In summary, the sentence indicates that obtaining a quitclaim deed can have important implications regarding rights of way or mutual use on a property and how easements are established or confirmed on that property, especially if a third party is involved and is in the chain of title.

Deed Restrictions and Covenants - Deed Restrictions and Covenants - Deed Restrictions and Covenants - Deed Restrictions and Covenants - Deed Restrictions and Covenants (Ref 74-76; CC 1468; GC 12955)

Restrictions imposed by deeds, or in similar private contracts, may be drafted to restrict, for any legitimate purpose, the use or occupation of land or property.

The right may not be exercised in a manner prohibited by law.

Any restriction prohibiting use of the property on the basis of race, color, sex, religion, ancestry, national origin, age (in general), disability, sexual orientation, marital status, familial status, or source of income is unenforceable under state and federal law.

Home Exemption - Homestead exemption (Ref 77-81: CCP 704.710)

The primary purpose of the homestead exemption is to protect the homestead against creditors of certain types whose claims could be enforced through the execution of a judgment lien.

When a valid homestead declaration has been filed with the county recorder's office, the property becomes a protected homestead against foreclosure and forced sale, except as provided by law.

The home remains in force until it is terminated by conveyance, abandoned by a recorded instrument of abandonment, or sold at a foreclosure sale.

The validity of a dwelling depends not only on the filing of the housing declaration, but also on certain off-record matters, including actual residence in the declared dwelling at the time the declaration is recorded and an actual interest in the "dwelling."

The property is not protected from a forced sale if it is obtained a sentence:

• prior to the filing of the housing declaration;
• on debts secured by liens on the property executed by the owner before the declaration was filed for registration; and
• obligations insured by mechanics' liens, contractors, subcontractors, workers, suppliers or vendors on the property.

Voluntary encumbrances (such as mortgages) by the homeowner are not affected by a declaration of homestead.

The amount of the homeowner's exemption ranges from $50,000 to $150,000The amount of the lien is determined by the status of the debtor at the time the creditor's lien is recorded.

Planning, zoning, development (Ref 465-470; GC 65300)

By state law, each city and county must adopt its own general plan for long-term physical development.

Most cities and counties in California have adopted ordinances that divide their jurisdictions into land use districts or zones.

Authority for local zoning is derived from the police power in Article XI, Section 7 of the California Constitution, supplemented by state laws that establish minimum standards and procedures for exercising zoning regulations.

State Housing Law (State Housing Law) Ref 461; HSC 17910, 17922(b))

The State Housing Law, administered by the Codes and Standards Division of the Department of Housing and Community Development, establishes minimum construction and occupancy requirements for housing.

Building regulations under this law are handled by local building inspectors, while occupancy and sanitation regulations are enforced by local health officials.

No construction or alteration may commence prior to the issuance of a building permit.

The law replaces local building codes with the Uniform Housing Code, Uniform Building Code, Uniform Plumbing Code, Uniform Mechanical Code, and National Electric Code.

The local government retains only the power to determine local use zoning requirements, local fire zones, building separation distances, and property boundary requirements.

Contractors State License Law (Contractor's State License Law Ref 461-2)

Under the Contractors' State License Law, any person engaged in the business of contractor in this state must be licensed by the Contractors' State License Board, with some exceptions, such as when it is an owner's own work, and the property is not intended to be sold within 1 year.

Public Domain

(Ref 462-3)

The federal government, states, cities, counties, improvement districts, public utilities, public educational institutions, and similar public and semi-public entities may exercise the public domain power. The U.S. and California Constitutions require "just compensation" for an expropriation. Expropriation can occur within several weeks of prior notice, before any price is paid or even determined, when the expropriator deposits an estimated price with the court and obtains a court order. Not every governmental activity that reduces the value of a property constitutes an expropriation requiring compensation. Government regulation or taxation must negate any economically beneficial or productive use of the land for compensation to apply.

California Environmental Quality Act (Ref 469)

The California Environmental Quality Act of 1970 (CEQA) provides procedures and information to ensure that government agencies consider and respond to the environmental effects of their proposed decisions.

Water conservation, flood control (Ref 463)

California law provides that an individual's water rights shall not exceed the amount reasonably required for beneficial use. Courts refer water rights litigation to the State Water Resources Control Board for investigation, report and/or preliminary hearing and determination, subject to a final decision by the court (Water Code Section 2000, et seq.).

Subdivision regulations

The two basic subdivision laws in California are the Subdivision Map Act (Government Code Sections 66410, et seq.) and the Subdivision Land Act (Business and Professions Code Sections 11000 - 11200).

Subdivision Map Act (Subdivision Map Act (GC 66410; Ref 445)

The Subdivision Map Act establishes the conditions for approval of a subdivision map and requires the enactment of subdivision ordinances that give local governments direct control over the types of subdivision projects and physical improvements.

Main objectives of the law:

• Coordinate the design of a subdivision (lots, street patterns, rights-of-way for drainage and sewer, etc.) with the community plan.
• Ensure that the subdivider adequately completes areas dedicated to public purposes so that they do not become an undue burden on community taxpayers.

Definition of subdivision according to this law:

• 2 or more contiguous lots, units or parcels, including residential subdivisions within the city limits; plots of over 160 acres; community apartments; condominiums; zoned industrial or commercial subdivisions.
• Excluded: “proposed divisions”; share cooperatives of less than 5 units; leased units in buildings; leasing or financing mobile home and trailer parks; undivided interests; agricultural leases; limited capital housing cooperatives.

Subdivision Lands Law (Subdivision Lands Law - BP 11000-11200; Ref 445-461, 464)

The Subdivided Land Law, administered by the Commissioner of Real Estate, protects buyers against fraud, false representation and deception in the initial sale of subdivided properties.

Definition of subdivision according to this law:

• 5 or more lots, units or parcels, including “proposed divisions”; community apartments; condominiums; share cooperatives; long-term leases on mobile home and trailer parks; undivided interests; agricultural leases; limited capital housing cooperatives.
• Excluded: residential subdivisions within the city limits; parcels of 160 acres or more; leased units in buildings; zoned industrial or commercial subdivisions.

Financing and Credit Laws

Sources of Financing

Deposit sources: savings and loan associations, savings banks, commercial banks, savings and credit cooperatives.

“Non-banking” sources: mortgage bankers, financial lenders, private individuals and entities, pension funds, mortgage trust funds, investment funds and hedge funds.

Insurance companies.

Federal institutions: FHA, VA, FNMA, FHLMC, GNMA.

California Housing Finance Agency (California Housing Finance Agency -CalHFA): A self-supporting state government agency that finances mortgage loans for low- and moderate-income first-time homebuyers.

California Home and Farm Buying Program (California Farm and Home Purchase Program – CalVET): helps California veterans purchase a farm or single-family residence. The state acquires title and sells it to the veteran under a land contract, with low down payment requirements and below-market interest rates.

California Predatory Lending Law

Limits or controls specific loan terms and prohibits certain practices of lenders and mortgage loan brokers (MLBs) in connection with consumer loans secured by the borrower's primary residence.

Amendments to federal law require disclosures to be made to consumers/borrowers in loan transactions where the secured property is an owner-occupied home.

California Covered Loan Law

Protects “High Cost Loan” consumers/borrowers from abusive lending and brokerage practices.

Applies to consumer credit transactions secured by residential real estate located in California, enhanced by a 1-4 unit single-family home and intended to be the consumer/borrower's primary residence.

California Higher Cost/Priced Mortgage Loan Law

Imposes limits on prepayment penalty rates.

Loan transactions subject to this law are the same as those established by federal law (Regulation Z, 12 CFR Section 226.35).

Home Mortgage Disclosure Act (Home Mortgage Disclosure Act)

The federal Residential Mortgage Disclosure Act (HMDA) and Regulation C apply to federally insured banks, savings and loan associations, thrifts, credit unions, and “for-profit” mortgage lending institutions.

These institutions are subject to reporting under HMDA when home purchase loans meet or exceed certain volume levels.

Holden Law

Imposes requirements similar to those of HMDA on lenders/creditors that are state-licensed or state-licensed depository institutions or that are authorized under California law.

It seeks to ensure that no financial depository institution discriminates in the financing of accommodations based on the characteristics of the neighborhood or geographic area surrounding the accommodations.

Fair and Accurate Transaction Act (Fair and Accurate Transaction Act)

The FACT Act establishes what are known as the “Red Flag Rules” and the “Management Disagreement Policy.” These are important regulations intended to protect consumers and ensure fair and accurate business practices in credit and finance.

1. Red Flag Rules: Under this part of the law, financial institutions and lenders must establish policies and procedures to detect and respond to red flags of possible identity theft or fraud in their operations. This involves identifying unusual or suspicious activity that may indicate that someone is trying to use another person's identity to obtain credit or conduct financial transactions. Institutions must take steps to protect customer information and prevent identity theft.
2. Address Discrepancy Policy: This policy requires that financial institutions and lenders have procedures in place to identify and respond to discrepancies in addresses provided by credit applicants. When there is a discrepancy between the address provided by an applicant and the information available in credit reports, the institution must take steps to verify the identity of the applicant before approving credit. This helps prevent misuse of personal information and ensure accuracy in credit transactions.

Fair Credit Reporting Act (Fair Credit Reporting Act)

The Fair Credit Reporting Act, governed by Title 15 of the United States Code, Section 1681 et seq., and California Civil Code Section 1785.14 et seq., guarantees consumers the access to your own credit information. Mortgage brokers (MLB/MLO) are required to provide specific disclosures to a consumer applying for credit secured by real estate under this law.

These regulations are essential to protect consumers and promote integrity in financial and credit transactions. They help prevent identity theft and ensure that financial institutions take appropriate action when warning signs of potential fraudulent activity are detected.

Remember that compliance with these regulations is the responsibility of financial institutions and lenders, but consumers should also be aware of their rights and responsibilities regarding the security of their personal and credit information.

Real Estate Specializations

In the world of real estate in the United States, there are various specializations that address specific aspects of this industry. Below, we'll explore some of these key specializations:

Mortgage Loan Brokerage and Loan Origination (Mortgage Loan Brokerage and Loan Origination)

Real estate brokers are authorized to act as mortgage loan brokers (Mortgage Loan Brokers or MLBs) and to facilitate mortgage loans secured by real estate liens. The functions of an MLB include:

• Apply for and Negotiate Loans: MLBs may apply for and negotiate mortgage loans on behalf of borrowers and lenders.
• Payment Collection and Other Related Services: They may also handle payment collection or perform other related services for borrowers or lenders, including promissory note holders.
• Offer to Sell, Purchase or Exchange Promissory Notes: MLBs may offer to sell, buy, or exchange promissory notes on behalf of holders when these loans are secured by real estate liens.
• Advance Fee Collection: They have the ability to charge fees in advance.
• Securities Issuance: May issue securities, as defined in the Real Estate Law and in compliance with the Corporate Securities Act of 1968 and applicable regulations of the Commissioner of Business Supervision.

In addition to MLBs, there is the concept of a Mortgage Loan Originator (MLO), which is a licensee who takes a residential mortgage loan application or offers or negotiates the terms of such a loan in exchange for compensation or profit. A salesperson must have an MLO license and be employed by a real estate broker with a mortgage loan originator license to perform certain activities that require such a license.

Prepaid Rental Listing Service (Prepaid Rental Listing Service)

A prepaid listing service is a business that supplies prospective tenants with listings of residential properties available for rent in exchange for an upfront or concurrent fee. It should be noted that it does not imply the negotiation of rents by the person providing the service. To conduct this type of business, a person must obtain a specific license or a real estate broker license.

Mobile Home Sales (Mobile Home Sales)

A licensed real estate broker may engage in activities with respect to mobile homes or manufactured homes only if the home has been properly registered. This means that they can facilitate the purchase or sale of these properties, as long as they are properly registered.

Appraisal

California law establishes specific regulation for real estate appraisers through the Real Estate Appraiser Licensure and Certification Act (1990). This law created the Office of Real Estate Appraisers (OREA), which regulates real estate appraisers in California by issuing licenses and investigating complaints about illegal or unethical activities by licensed appraisers. In California, there are four levels of licenses for appraisers:

• General Certified Real Estate Appraiser: You can appraise any type of property.
• Certified Residential Real Estate Appraiser: Can appraise 1-4 unit residential properties and non-residential properties with a transaction value of less than $250,000.
• Residential License: Can appraise non-complex 1-4 unit residential properties with a transaction value up to $1,000,000, and non-residential properties up to $250,000.
• Learning License: Must work under the supervision of a Certified General or Certified Residential Real Estate Appraiser.

All appraisers licensed in California must comply with the Uniform Standards of Property Appraisal (USPAP) in their appraisal duties. Real estate licensees should be careful not to claim to have more appraisal skills or experience than they actually possess, and should seek the advice of a professional real estate appraiser when they are unable to competently conduct an appraisal.

Development

There are no state licensing requirements for developers or subdividers in California. Developers are engaged in the creation of residential, commercial or industrial sites, either as subdivisions of vacant land or as improved or partially improved subdivisions.

Business Opportunity Brokerage

To engage in the sale or rental of business opportunities, a real estate license is required. A “business opportunity” refers to the sale or lease of the business and goodwill of an existing company. Selling a business opportunity may involve the sale of only personal property. If real estate is included in the transaction, the agent generally handles the sale of the business and the sale of the land or building as two separate and concurrent transactions with two simultaneous and dependent trusts.

Mineral, Oil, Gas Brokerage (Mineral, Oil, Gas Brokerage)

Real estate brokers in California can also participate in transactions related to minerals, oil and gas. Those who hold MOG licenses issued in the past may renew their licenses, but no new MOG licenses are being issued. A real estate license is required to assist another in submitting a purchase or lease application, or to locate or enter to mineral, oil or gas properties owned by the state or federal government. Any person acting as a principal in the purchase, lease or option of land or mineral, oil or gas property must obtain a real estate license if he or she intends to sell, exchange, lease, sublease or lease the property to another. person. Additionally, anyone offering mining claims for sale or assignment must have a real estate license.

Property Management

Property management is a specialty in which real estate brokers manage everything from homes and duplexes to larger projects such as office and industrial complexes, shopping centers, apartment buildings and condominiums. Those who work under the supervision of a licensed property manager do not need to obtain a real estate license.

These specializations reflect the diversity and complexity of the real estate market in the United States, and each requires a specific set of skills and knowledge to succeed in the industry. Whether you are interested in mortgage brokerage, property management, or any other area, it is essential to understand the applicable regulations and requirements in your state and to be properly licensed to practice in that specialization.