How to Hold Title to Real Estate

I have been asked the questions many times how should people hold title to real estate in California. Let’s talk about the options.

First and foremost, for anybody that owns real estate in California, the best method is in a California revocable living trust. The other options, below, are a distant second place.  Why is that?  The main reason is that trust ownership avoids probate after death and it also avoids the need for a conservatorship if incapacity happens during life. It’s really that simple.  Probate and conservatorships are extremely expensive and should pretty much always be avoided.  So owning a property in a revocable living trust is the best.

However, owning property in a trust is not the only method and there is one primary reason everybody does not have one… they are expensive to set up.  You can easily spend $2,500 to have an experienced estate planning attorney prepare a living trust package. That’s a lot of money to just about any of us. Plus there is some work involved to get your assets into a trust.  So, let’s say you don’t have a trust… then how should you title your California real estate?

I stress California because other states might have other options. For example “tenancy by the entirety” is something that exists in other states but not in California.  TBE may be a great option… if it was legal in California. So that’s a non-starter.

The most common debate in California real estate is if a husband and wife should own property as “joint tenancy,” as “tenants in common,” or as “community property with the right of survivorship.”  Which is best for you?  Of course, each case is unique and you should talk to your own attorney to get legal advice.

JOINT TENANCY:  JT is really the granddaddy of real estate ownership. It’s probably the most common way to own property in California. Joint tenancies have to be equal (i.e. 50/50 or 1/3 to each of three people or whatever is equal for the number of owners) and automatically transfers to the surviving joint tenant (or tenants) upon death.  Joint tenancies tend to be a good option but not always the best.  One problem is that the survivor does not get a full step-up in basis, at the first death, as they would with a trust or with CPWROS (discussed below).  Also, JT is not good if you do not want the property to transfer to the other tenant or tenants.

TENANTS IN COMMON:  TIC is commonly for non-married people or any co-owners that want full control for their portion of the real estate. If a deed does not specify otherwise it defaults to TIC in California.  TICs also can be used for advanced estate planning purposes by use of a tenancy in common agreement but that is an issue for another day.  A TIC is a good option when you do not want the property to transfer to the survivor upon death.

COMMUNITY PROPERTY WITH RIGHT OF SURVIVORSHIP:  CPWROS is probably the best option for married couples to own property (other than a trust).  This would be for long term marriages or for any marriage for both spouses want the surviving spouse to have their interest in the property.  It’s similar to a joint tenancy, in that the property transfers automatically upon death, but the surviving spouse gets a full step up in basis for tax purposes which can be a huge deal in more valuable properties.  CPWROS has only been around in California for about 15 years.

COMMUNITY PROPERTY: Before California had CPWROS they had CP (without WROS).  CP is good in that it gives the surviving owner a full step up for tax purposes but the property does not automatically transfer upon death. Instead the surviving spouse has to go to probate court and do a spousal property petition. This is costly and time consuming.  There are many old deeds that have CP ownership so check your deed as, in my opinion, this can be the worst way to own property.

Other options to own property include limited liability companies (LLCs) but that’s primarily for investment properties and beyond the scope of today’s post.

Thanks for reading!  -John Website Review

I recently became acquainted with This website helps consumers find experienced Realtors to help them with their home sale among other features. It’s a really robust site and I encourage my readers to check it out!

It has extensive information about the probate process and helping you find a probate experienced Realtor. This is a great resource for a person who is selling a house in an area and you haven’t received any referrals. screens the Realtors to find the best of the best and, in particular, those with probate experience.  Here’s the probate page:

Another feature I really like is the appraisal estimator. This aggregates multiple sites, like Zillow, to give you a broad range of value. Here’s that feature:

Lastly, if you want to sell quick it has a feature where it will present your home to multiple investors who will buy your house quickly and for cash. I am told they will pay 80% or more of fair market value sight unseen. I have not tried this out but it sounds like a great option for some consumers. Here’s the link:

All in all I am very impressed with what I have seen from and look forward to their future offerings as I am sure they will continue to grow and expand!


Bank of America mortgage trust certification form

For some time now I have advised clients to contact their mortgage holder to see about linking their trust to their mortgage. Without that you can leave your trustee with a problem. The house might be owned by the trust but the mortgage is not connected to the trust. When that happens the trustee can have a very difficult (if not impossible) time getting information about the mortgage.  This is a great service that Bank of America is offering and I encourage you to see if your mortgage bank has similar.  The only downside is that they are charging $100 to process the form. Here’s that form:

Borrower Trust Information and Certification Form
Loan #:
Property Address:
Name of Trust:
Date of Trust:
Beneficiaries during Grantor’s Lifetime:
Term of Trust:
Occupants of above property:

l/We, Borrower (s) _________________ certify that the Trust is an inter vivos Trust, and that l/VVe will not alienate or transfer my/our interest in the trust. l/We will remain the beneficiaries of the Trust, and retain all beneficial interest in the trust, at all times during the term of the Loan identified above.  l/We certify that the property will continue to be occupied by me/us as my/our primary residence at all times during the term of the Loan.
By SIGNING BELOW, l/We hereby certify and acknowledge that the foregoing information is true and correct.



County of

State of

On _________________ before me, ______________ a notary public of the State of , personally appeared __________________known to me to be the person(s) whose name(s) is(are) subscribed to the within instrument, and acknowledged that he/she/they executed the same.
WITNESS my hand and official seal

Notary public in and for said State
This communication is from Bank of America, N.A., the servicer of your home loan.
TrustInfoCert 6594 09/1 3/2006

Special Letters of Administration and Mortgage Companies

“My husband died and the mortgage company won’t talk to me.”

This is becoming a common statement that I hear. Mortgages and the actual deed to real estate are NOT connected. They are separate.  So, for example, if a spouse dies with a house in their name the other spouse can often use a “spousal property petition” to transfer assets to themselves without going through a full probate. However, the mortgage, or encumbrance against the property, does not transfer with the “deed” or title.


Say it isn’t so Mr. California Probate Lawyer!

It’s true.

Plus, mortgage companies are making it more and more difficult to communicate with them after death. Sure I have known of people who have pretended to be the decedent and that can last for years but eventually that will stop working. Plus it’s not legally correct to do that!

I recently encountered an interesting situation. Mom and son were thoughtful enough to prepare a deed, before mom died, to transfer her home to her son.

Now, since you read my blog you know this might have negative tax ramifications after death but, putting that aside, it avoided probate so in general it’s fine. However, the mortgage company really doesn’t care about the deed transfer. They do not care because the deed transfer is completely separate from the underlying mortgage. The client wants to talk to the mortgage company about a loan modification.  The mortgage company won’t talk to him since mom is dead. This is truly a problem.

What can be done?

Rightfully so the client wants to avoid a full probate. I do believe a full probate can be avoided.The answer is Letters of Special Administration.

Letters of Special Administration is basically a limited probate. It’s limited to whatever is specified in the petition. The more limited it is the more likely the court will approve it. We thus may ask for limited powers to communicate with XYZ Mortgage Company regarding loan 1234. Or maybe we will ask for general powers related to real estate.

See California probate code 8544 below:

8544. (a) Except to the extent the order appointing a special
administrator prescribes terms, the special administrator has the
power to do all of the following without further order of the court:
(1) Take possession of all of the real and personal property of
the estate of the decedent and preserve it from damage, waste, and
(2) Collect all claims, rents, and other income belonging to the
(3) Commence and maintain or defend suits and other legal
(4) Sell perishable property.
(b) Except to the extent the order prescribes terms, the special
administrator has the power to do all of the following on order of
the court:
(1) Borrow money, or lease, mortgage, or execute a deed of trust
on real property, in the same manner as an administrator.
(2) Pay the interest due or all or any part of an obligation
secured by a mortgage, lien, or deed of trust on property in the
estate, where there is danger that the holder of the security may
enforce or foreclose on the obligation and the property exceeds in
value the amount of the obligation. This power may be ordered only on
petition of the special administrator or any interested person, with
any notice that the court deems proper, and shall remain in effect
until appointment of a successor personal representative. The order
may also direct that interest not yet accrued be paid as it becomes
due, and the order shall remain in effect and cover the future
interest unless and until for good cause set aside or modified by the
court in the same manner as for the original order.
(3) Exercise other powers that are conferred by order of the
(c) Except where the powers, duties, and obligations of a general
personal representative are granted under Section 8545, the special
administrator is not a proper party to an action on a claim against
the decedent.
(d) A special administrator appointed to perform a particular act
has no duty to take any other action to protect the estate.

The highlighted portion above is key as it should allow the Special Administrator to deal with the mortgage company and figure out a plan for the mortgage.

Fees in special administration cases are by agreement of the parties. The typical statutory probate fee schedule does not apply. I generally offer these on a flat fee basis to give the client’s the most certainty and avoid surprises.

I should add that special letters can be used in many other situations such as accessing bank accounts to pay mortgages and funeral expenses, investigate safe deposit boxes, and more. The key is getting the court order so it’s all legal!


Holding trust property in joint tenancy

Can it be done?  Can property be held in trust AND in joint tenancy?  Your lawyer told you it can’t be done, right?  Tell them to review California Civil Code section 683(a).

683. (a) A joint interest is one owned by two or more persons in
equal shares, by a title created by a single will or transfer, when
expressly declared in the will or transfer to be a joint tenancy, or
by transfer from a sole owner to himself or herself and others, or
from tenants in common or joint tenants to themselves or some of
them, or to themselves or any of them and others, or from a husband
and wife, when holding title as community property or otherwise to
themselves or to themselves and others or to one of them and to
another or others, when expressly declared in the transfer to be a
joint tenancy, or when granted or devised to executors or trustees as
joint tenants. A joint tenancy in personal property may be created
by a written transfer, instrument, or agreement.
(b) Provisions of this section do not apply to a joint account in
a financial institution if Part 2 (commencing with Section 5100) of
Division 5 of the Probate Code applies to such account. (Emphasis added)

What?  That can’t be?  Can it?

So yes California law does allow a trust to be a joint tenant. The problem is it’s a relatively obscure law, in my opinion, that most lawyers do not know and I wonder how many title companies know?

If you are going to go this route you need to be very specific on the deed that it is to be held in joint tenancy. Maybe even say “pursuant to California Civil Code 683a) and maybe even specify who is the measuring life for the trust’s joint tenant interest. It has to be the person who transfers it to the trust.

So, for example, Able and Buddy own a property together as joint tenants. Able wants to transfer his half to his trust.  The deed should read something like this:

Able and Buddy as joint tenants deed to:

Able as trustee of the Able Trust and Buddy as joint tenants, pursuant to California Civil Code 683a.

Accuracy is key here. This is not for the do-it-yourselfer!  This is for an experienced lawyer to do!

Contact us with questions. -John

The Probate Real Estate Auction


In a recent blog post I explained what happens in the probate real estate process. That postfocused on how to respond to a notice of proposed action. Now, let’s take it a step further and talk about what happens AFTER YOU OBJECT TO A NOTICE OF PROPOSED ACTION….


So you got the NPA (notice of proposed action) in the mail, you thought about it, you talked to your friends, you debated, and finally you OBJECTED! You did it. You signed the form, on page 2, where it says OBJECT and you sent it to the attorney. Of course, you did this within 15 days of the notice being sent (or at least before the house closed escrow).


Before I go on it’s important to remember that without a time machine, to travel ahead a year or two, it’s IMPOSSIBLE to know what a house will be worth. I once heard that, with the stock market at least, a price is determined when half the people think it’s going up in value and half the people think it’s going down. Houses are not that much different.


Each case is unique and different. It’s almost impossible to really “know” if it  was a good choice merely by looking at the raw numbers provided by the probate attorney.


Let’s analyze a hypothetical case.   Let’s say a house is appraised for $375,000 by the probate referee. First thing to ask is when was the appraisal done?  Date of death or was it a “reappraisal for sale?” So let’s say there is an appraisal that says it’s worth $375,000. Is it? Did the appraiser go out to the house or do a “drive-by” appraisal? In my experience the probate referees usually do a drive-by so the accuracy is questionable; it’s more of an average.  Is the house in question in better or worse condition than average? Does it need work?  If the house is selling for $300,000 is it definitely too low?  It’s really hard to know just looking at the raw numbers.


Plus, don’t just look at the apparent bottom line number. Make sure you look through all pages of the contract. Look for buyer’s credits, requests for repairs and how the closing costs are to be divided. The actual sales price can be heavily clouded by these other things which can drastically change the bottom line.


So, you have objected… now what?  In some cases when the buyer learns of the objection she will walk away from the deal. There are so many investors out there right now and investors don’t want to tie their money up in deals that can drag on for months. Thus many of them will WALK!   If this happens the sales process starts over. At least in the current HOT HOT HOT real estate market you are likely to get another buyer fast… or at least hopefully you will. It’s like a good game of chess… you need to think about your move carefully!



So, you have objected, the buyer hasn’t walked, well then what? The Executor’s attorney will have caused notice to be sent to the buyer and all interested parties of the sale. The attorney also will cause publication to be made in the legal section of an appropriate newspaper; but do any real buyers read that or just other investors?  The buyer, and others, may show up in Court to bid or at least watch the bidding. In my personal experience there are typically NO bidders at Court. Thus, it usually only delays the process but, in some cases, a bidder or two emerge to raise the price!


The bidding process is an auction and the probate Judge is the auctioneer. She literally calls out the property for sale, the terms of the sale, and asks if anybody wants to bid on the property. The first overbid is about 5% over the contract price. The exact formula is laid out on California Judicial Council form DE-260. If nobody overbids the Judge calls out “going once, going twice, and SOLD” or something very close to those exact words. It’s literally an AUCTION!


After the auction the sale can be closed within a few days by taking the certified Court Order to the title company. The Executor’s attorney will take care of that.

Selling A Home In Probate?

How to respond to the Notice of Proposed Action

You have received a notice of proposed action in a probate real estate sale… now what do you do?  You have options.

Generally the notice says that you have until a date (15 days after the notice is mailed) by which you must object to the sale terms. In fact, you can object until escrow closes, even if after 15 days, but better to object right away in most cases.

So you can object, consent or do nothing.

Should you object?  Each case is different.

The Possible Result of an Objection

By objecting you create a Court auction. A Court auction costs money. There will be Court costs (likely close to $500 to file the petition to confirm the sale) and attorney fees (the probate attorney is entitled to extraordinary fees for work done related to real estate sales). For example, if you are a 50% beneficiary of an estate each dollar spent is coming half out of your pocket. To ballpark it let’s say it costs $3,000 between fees and costs to do a petition to confirm sale that would mean $1,500 coming out of your pocket.

Will the probate Court auction earn more money?  Sometimes yes and sometimes no. In my experience the majority of cases do NOT get overbids at Court and thus the first bid is ultimately sold to at the original price.

Worse yet, especially in recent years when the real estate market was falling, many deals fell out of escrow when a Court auction was created. However, things are better now and that’s less likely. A concern still though.

On the other hand maybe by objecting the executor of the estate will go back to the buyer and try to get a few thousand more if that will satisfy you. Life is a negotiation!

Can you do anything to encourage more bids at Court? The Court auction is literally a public auction governed by the probate Judge. Anybody can show up and bid. Advertising in a legal newspaper is required but that only gets investors who actually read those ads. If you want real buyers you need to tell Realtors, tell friends, take out pretty ads in the real estate section of the paper, etc…. Marketing 101!

At the end of the auction the Judge says “going once, going twice… SOLD.”

In the end, as stated above, each case is different.

Let’s talk about YOUR case specifically!

-John Palley

Trust Certification

I am often asked to help walk a client through a trust certification form. Either for a re-fi on their mortgage or a new bank account. After filling out 25 of those, or more, the last year I thought I would post it here to help my readers know exactly what is needed. This is a sample trust certification or certification of trust or certified extract of trust or certified abstract of trust.

If you have any other questions or wish to reach out to me, please give me a call at 916-920-5983 and we can talk further.

Well, with no more delay, here you go:


I/We, ________________________________________, [enter your names here] trustee(s) of the ______________________________ [name of your trust here] confirm the following facts1. The ________________________________________ [name of your trust] is currently in existence and wcreated on ______________________________ [Date your Trust was signed].

2. The settlor(s) of the trust are as follows: _____________ [enter your name(s) here]
3. The currently acting trustee(s) of the trust is/are:__________ [enter your name(s) here]
4. The power of the trustee(s) includes:
a. The powers to sell, convey and exchange ¨ Yes ¨ No (check one) [most likely YES]
b. The power to borrow money and encumber the trust property with a deed of trust or mortgage
¨ Yes ¨ No (check one)[most likely YES]
5. The trust is ¨ revocable; ¨ irrevocable (check one) [typically these are filled out for REVOCABLE trusts but of course some, especially after death, may be irrevocable] and the following party(ies) if any, is/are identified as
having the power to revoke the trust: ______________ [your name(s) here]
6. The trust ¨ does, ¨ does not have multiple trustees (check one). If the trust has multiple trustees, the
signatures of all the trustees or of any
of the trustees is required to exercise the powers of the trust.
7. The trust identification number is as follows:
(Social Security Number/Employee Identification Number) [typically the social security of either settlor goes here]
8. Title to trust assets shall be taken in the following fashion: ________________ [Your name(s) as trustee of the _____ trust, dated ______________ ]

The undersigned trustee(s) hereby declare(s) that the trust has not been revoked, modified, or amended in any
manner which would cause the representations contained herein to be incorrect. This certification is being signed
by all of the currently acting trustees and is being executed in conformity with the provisions of California Probate
Code Section 18100.5, Chapter 530, Statutes of 1993.
IN WITNESS WHEREOF, the undersigned have executed this document on the date(s) set forth below.
By: ____________________________________
State of
County of
On ______________________________ before me, , Notary Public,
(here insert name and title of the officer)
personally appeared ,
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized
capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is
true and correct.
WITNESS my hand and official seal.
Signature ____________________________________(Seal)

Real Property Transfers After Death and The Tax Assessor’s Office

It sometimes seems that the real estate transfer forms which are required in a California probate do not work together. This is true. There are multiple systems working together and thus problems persist. You have the Courts, the assessor’s office, and the recorder’s office. Let me explain each one:

STEP ONE: The Inventory and Appraisal form (California form DE-160) is required to be filed within 4 months of letters issuing (Probate code 8800).  On that inventory it states that you HAVE notified the county, where any real estate was owned by the decedent, that the decedent died.

STEP TWO: Pursuant to step one we have to notify the county of death. That is done by filing anEstate Change in Ownership form (available on county assessor websites throughout California). This form indicates who the anticipated recipients are of the real estate. This of course is not always known.

STEP THREE: In response to receiving the Estate Change in Ownership form the county assessor’s office will likely generate a Parent to Child Exclusion form (available on county assessor websites throughout California – BOE-58). It technically needs to be filed within 3 years of death (and also BEFORE ANY SALE TAKES PLACE) but the county assessor usually requires it within 2 weeks and will re-assess if not received. The problem is that supporting documents are supposed to be filed with the Parent to Child form but we won’t have those until the probate is over.

STEP FOUR:After a petition is filed to end the probate a Court Order is received which distributes the property. The Court Order says who receives the real estate. It may be different than indicated above because things can change. If that happens you should do an “amended” Parent to Child Exclusion form.  The Court Order is recorded in the county Recorder’s office.  The Court Order should plainly spell out the address, APN number and legal description of the property. Also, the Court Order should plainly indicate who is to receive that property.

STEP FIVE: With the recording of the Court Order you should also send in a Preliminary Change of Ownership form. The “PCOR” is available on most county assessor websites in California. It’s important to file this, even if not technically required,” because it’s the tax assessor who sends out tax bills. If they don’t update their records a problem can ensue with a confused “ownership” of the property.

STEP SIX: The final, and optional, step is to record an Executor’s Deed. This just repeats what the Court Order says but sometimes is easier to get the legal “ownership” records changed.

If you have questions about any of the above let me know!

-John B. Palley

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