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now this chapter chapter 4 is basically about transferring title to real estate ways that real estate can be transferred and what's interesting about this if you look at the bottom of page number 94 back in the day real estate used to be transferred by like twig or rock or a clump of dirt so you'd buy my you know five square miles of land and I'd give you you'd give me some money and I'd give you a twig or a branch or a clump of dirt or a rock and that would kind of be a ceremonial transferring of title obviously that didn't work for very long and we needed a more systematized method of transferring real estate now one way that real estate could be transferred is by will and if you look here on page number 85 you'll see there's a term for you dying without a will you having died without a will you're said to have died intestate so intestate is when someone has died without first having made a will now California says well we don't know what the hell to do with your stuff if you die without a will so we'll just make up a will for you that will the government's will is called succession now if you look here on page number 85 there's two possibilities either you have a will or you've died intestate dying without a will again you've died intestate the rule book that says what is to happen to your stuff if you die intestate is known as succession now if you look here I'm going to flip to page number 86 for a second of course if it's community property like we talked about in chapter 3 of course if it's community property you die without a will it's generally going to go to the surviving spouse more interesting is if you have separate property if you have a spouse and a kid and you have separate property and you die intestate half's gonna go to the spouse HAP's gonna go to the kid if you don't like that what should you do write a will because succession only applies if you die intestate if you have a spouse and more than one kid one thirds gonna go to the spouse two thirds are gonna go to the kids again if you don't like that what should you do you should write a will because dying intestate requires succession mainly because you haven't told the government what you want to happen to your stuff so again everybody has a will the question is is it your own or is it the government if you die without a will by default succession will generally occur as outlined at the top of page number 86 now if you come back to 85 but just want to go over a couple of vocabulary words with you here at the bottom of page number 85 you have the term devised and the term bequests at the bottom of 85 both pretty important one of these is the term devised a device is a gift of real estate by will so if I die and I leave you my house in my will that's called a devise now if I die and I leave you a hundred thousand dollars cash or a watch or my car or you know jewelry in but by will that's of course of course called a buck West so again a gift of real estate by will called a devise a gift of personal property by will is called a buck west at the bottom of page number 85 now a couple things on page number 87 that are important a couple different kinds of wills that we should probably know for the exam one will we should probably know for the test on page number 87 is called a witnessed will a witnessed will is one that you sign and of course someone else countersign it's like a notary public or your estate planner or a lawyer and that's called a witnessed will another kind of will that we should know for the exam on page number 87 is called a holographic well a holographic will is one that is totally and completely written by hand now because it's written by hand the holographic will does not need to be witnessed so a couple ways to ask the same question over and over again one way is for example a will that as totally handwritten is known as what holographic well number two because a holographic will is totally hand written the will does not need to be witnessed another way same question just asked a different way there can be no typed portions of what kind of will your answer a holographic will write so a holographic will is one that is totally completely written by hand there can be no typed portions of a holographic will and again because it's handwritten the will does not need to be witnessed now very famously Howard Hughes the great industrialists died and had you know was a complete cluster mess because everybody was like hey this is his holographic will hey this is this holographic well they're all written by hand we'll look at the date on that one look at the date on that one caused a huge problem right so generally it's best to work with an estate planner or a you know a your CPA or a lawyer to make sure that your you know whatever happens to your stuff is how you want because if you die intestate what's gonna happen succession is gonna happen by default they have to because we don't know what else to do with your stuff so if you look here at the bottom of page number 87 and all of 88 probate now everybody needs a niche right something that you're gonna do to differentiate yourself from the you know 10 trillion other real estate agents that are out there in the business one thing that I think is important or one way that you could differentiate yourself is to focus on probate sales now probate of course is a superior court proceeding where heirs are distributed their rightful share of an estate so probate is where you know all your family members that you haven't talked to in 50 years come out of the woodwork you're looking down from heaven and you know your aunt and your cousin who we haven't spoken to since 92 are out there saying he would want me to have his Ferrari he would want me to have his Rolex watch you know all these things now a few things about probate that we should know the will if you have a will the will or intestate succession is carried out through probate right so the court can appoint as it says here at the middle of page number 87 the court can appoint an administrator to carry out your will as you have outlined in the document now very important to have the very top of page number 88 about probate one thing that I would write down somewhere on page 88 because it's often on the test but it's not here in the book one thing that I would write down is that the minimum bid for probate is 90% of the appraised value the minimum bid for a property in probate is 90% of the appraised value so this of course is designed to protect the heirs protect the deceased to make sure that you know some sharp real estate investor doesn't show up out of the woodwork at your funeral you know convincing your heirs to sell the you know your family the family jewels for 40 cents on the dollar so that's important minimum bid 90 percent of the appraised value another thing that I would note that it is in the book and it's also often asked on the exam is on page number 88 you'll see this gray box of course probate sales of real estate I would highlight the last sentence in the last black square in that box broker Commission's are subject to statute and court approval now generally and we'll learn about this in chapter 6 real estate commission rates are negotiable there's no set minimum there's no set maximum they are completely 100% negotiable commissions except in probate in probate court the court actually needs to breathe on and bless the commission that the broker is charging so the Commission in probate of course is approved by who again is approved by the court the minimum bid for a property in probate is 90% of the appraised value and again the broker commissions are subject to statute and also to court approval so this is if this is something that interests you and you know probate sales of real estate seem like something that you want to get involved in I'd encourage you once you get your license to get with your local Association of Realtors that you belong to and take some probate classes to learn more about probate sales of real estate now what really bothers me sometimes when I hear people in our classes that pop in our classes have been licensed for a while and oh my god don't worry about everything that you learn in this real estate class you're not gonna learn about it you're not going to use it in the real world 95% of it is trash and that's not true a lot of this stuff is the fundamental kind of real estate 101 stuff but I'll be honest this one's kind of worthless in the real world but I do want to get you the vocabulary so you know it for the exam in case you get it if you look here on page numbers 88 and 89 you're gonna see four vocabulary words on 88 and 89 and what's frustrating about these four words frankly is they all look the damn same but I'm gonna go through these one by one the first word that I would look at here at the very bottom of page number 88 you'll see the word accretion so at the bottom of 88 you'll see a creature now what is accretion accretion is the gradual accumulation of soil on property bordering flowing water so if your house is on the bank for example of a river over time water may cause soil to accumulate on that shoreline that process of the water getting onto the shoreline is known as accretion so accretion is the gradual accumulation of soil on property bordering flowing water now who owes that extra soil candidly you do you own that extra soil in a legal theory called a session and you'll see a session here on page 88 at the middle of the page you'll see it mold the word is a session so accretion put it there a session is the legal theory that says that natural addition causes you to now own that extra soil so we have two words accretion is the gradual accumulation of soil on property bordering flowing water what's that called again it's called accretion a session is the legal theory that says you now own all that extra soil now another vocabulary word that's important is the word alluvium and alluvium is the name of the soil and you'll see the word alluvium at the very bottom of 88 the word is alluvium so alluvium is the name of the soil that got deposited by accretion so we have three vocabulary words so far accretion what is accretion accretion is the gradual accumulation of soil on property bordering flow and water what's that called again it's called accretion a session is the legal theory that says you now own that extra soil you own that extra soil through a legal theory called a session now the name of the soil has a special name and it's called alluvium soil alluvium soil at the bottom of 88 is the name of the soil deposited by accretion so accretion a session and a alluvium soil off to do with adding soil onto property and addition however the opposite is also important for the exam those a vocabulary word called avulsion and you'll see this on page number 89 you'll see this on 89 near the top of the page it says land could be lost let's say the water chain and a big chunk of your land comes detached on your land adjacent to a river the water just causes a chunk of the land to be detached from the soil that process where land is lost is called avulsion so avulsion is the violent and sudden tearing away of land by action of water so we have four vocabulary words first one accretion what is accretion accretion is the gradual accumulation of soil on property bordering flowing water that's called accretion a session the second word a session is the legal theory that says hey you now own that extra soil that's called a session the soil itself is called alluvium soil that got deposited by accretion and the violent and sudden tearing away of land by action of water is known as avulsion now remember this chapter is about transfer entitled real estate ways in which real property can be transferred now or even possession or use now there are three ways that are actually all quite interesting if you look here on page number 89 where it says occupancy sometimes you can take possession of real estate or ownership of it through or use of it through one of three ways adverse possession prescription and then abandonment we'll start with adverse possession now adverse possession is very rarely accomplished the way that you would do this is through a process called nacho an ACH show and the book on page number 90 used as an acronym called own chew not show is just much more clever and it's the same five letters and it's easier for me to remember so not ownership but nacho if you look at page number 90 here's how adverse possession works so here's how it may work for example let's say that you are going to move to Antarctica middle of nowhere and you say you know I'm so sick of society I'm just gonna sell everything I have and I move to Antarctica ironically as you talk about your disdain for society you've posted this on your Facebook page the link to the world saying hey look I hate everybody I'm moving to Antarctica so I phone you up and I say hey are you interested in selling your hundred parcels in Palm Springs and you tell me yeah I'm interested I want to sell everything and I say how much for it you tell me ten million I say no problem when I give you ten million dollars in exchange for ten million you give me a hundred deeds because you'll need a hundred deeds to transfer one hundred parcels now we do the deal and right you leave to an Archon you're out of communication with everyone I come home and I come to my office and I kind of look through the hundred deeds and I start counting them out erroneously there was only 99 deeds now you didn't try to screw me on that last one it was just a clerical error but I have a legitimate claim to that last parcel now I can't get in touch with you to fix it so what I could do is I could not show the land meaning that I could notoriously adversely continuously hostile and openly occupy the property for five years plus I got to pay the property taxes over the property that I want now the reason that the government in order to accomplish adverse possession requires that I pay your property taxes is candidly if it were really your property what would you be doing yeah you'd be paying the property taxes so if I not show the land notorious adverse continuous hostile and open use for five years plus I have some let's say claim of right or color of title and again I paid the property taxes for that five years I can then file an action and have the court grant me the property through a process called adverse possession so one way to acquire title to real estate is through adverse possession how was this accomplished through nacho notorious adverse continuous hostile and open use for five years plus payment of real property taxes for five years and some claim of right or color of title a court may grant me the property through a process called adverse possession that's one way another way to acquire use of a property is through a process called prescription and this has to do with easements and if you look at the top of page number 91 what is it easement an easement is the right to cross over someone else's property for access to yours now it's the same process as adverse possession to get a prescriptive easement except I don't have to pay your property taxes so theoretically I could notoriously adversely continuously hostile and open they use your land for access to mine for five years file an action and have the court grant me a prescriptive easement so again notice a prescriptive easement is the same process as adverse possession it's five years of use but prescriptive easements do not require that I pay property taxes payment of property taxes is not a requirement to get a prescriptive easement where it is a requirement under adverse possession now the third way to get use of real estate is through a process of abandonment by a tenant and through the bottom of 91 if a landlord reasonably believes that a tenant has abandoned maybe there's been no side of the tenant for a couple of months tenant hasn't paid their rent in some time the landlord may reasonably reasonably believe that the tenant has abandoned the property and attempt to reclaim possession of the unit so we can adverse possession not show plus taxes prescriptive easements nacho and then of course abandonment when a landlord reasonably relies on the fact that a tenant has abandoned the premises simply non use is not sufficient to claim abandonment must be like non use combined with you know non-payment of rent and cetera a landlord may reclaim possession of the property through abandonment now there's a couple of other things in Chapter four that I do want to talk to you about on pages 94 and 95 because they are important for the exam one of the vocabulary words on page 94 that's important is the word escheat so what is escheat well I'd put a box around the word sheet it'll help you remember it because the government's kind of cheating with s sheet you'll remember from earlier on in this chapter I mentioned something called intestate now what is intestate intested is when you've died without having made a will so if you died without a will your said to have died intestate now remember California has something called succession and succession dictates what happens to your stuff if you die without a will remember that half to the spouse half to the kid one-third to the spouse two-thirds to the kids if you have more than one child well if you don't like that you should write a will but what happens if you die intestate that is without a will and you have no heirs now what happens to your stuff well the state of California is gonna start a clock it's called the escheat clock this is a five-year waiting period during these five years the property is managed by the probate court and the state is supposed to be looking for heirs now if they can't find any heirs within let's say five years the state just takes it in a process called escheat so as cheap then is the reverting of real estate or personal property and personal property to the state because you've died intestate and you have no heirs the state just takes it in a process called escheat now if you don't like that what should you do well make a will or have some heirs because either one of those will prevent SG from happening so if the question on the exam said the reverting of property to the state when the deceased has no heirs and no will is called escheat now another few words that are important same page share on pages 94 95 our eminent domain now what is eminent domain eminent domain is the power of the government to take private property for some public use that power is known as eminent domain so if the government wanted to build a park or widen a street or build a freeway or widen a freeway the government would have the right to take private property for some public use that power is known as eminent domain so again eminent domain is the supreme power of the government to take private property for some public use now that's the power the actual process where the government comes in and takes the property from you that process is known as condemnation so condemnation is the process and by the way you'll see this term condemnation here on page number 94 in the eminent domain paragraph condemnation condemnation is where the government forces you to sell your property for that public use that's called condemnation what gave them the right to take it eminent domain so again two concepts number one the however that the government has to take private property for some public use that power eminent domain the actual process whereby eminent domain is exercised is known as condemnation but the opposite is also possible there is something called inverse condemnation at the bottom of 94 now inverse of course is like backwards or the opposite instead of the government forcing you to sell like in condemnation you are forcing the government to buy in inverse condemnation now let's be honest what's gonna be easier the government forcing you to sell or you forcing them to buy yeah the government forcing you to sell is going to be infinitely easier but what legal argument would you somehow have to make in order to get inverse condemnation to even work you would have to prove that something that the government did makes it impossible for you to enjoy your property now on the exam the question might be a property owner lives near a small airport over time that airport gets so big that the property owner can no longer reasonably enjoy their property they would have a claim based on what inverse condemnation so the airport gets so loud the property owners house is rattling in fact if you look at for example John Wayne Airport in Orange County the reason that they have a very distinct flight pattern the they go full-throttle and as the plane starts to kind of get over the house as they pull the throttle back to avoid causing noise you don't want all those people down there to claim inverse condemnation and have the government buy those houses because of airport noise so three words right number one eminent domain that's the power of the government to take private property for some public use then you have condemnation that's the process where the government gives you money and tells you to leave then you have inverse condemnation where you as a private citizen force the government to buy your property based on something that the government has done nearby that makes it impossible for you to reasonably enjoy your property that's called inverse condemnation now the last big section in Chapter four that I want to talk to you about is this chapter of the section about deeds now if somebody put a gun to your head and said to you prove to me that you own your house the document you'd pull out would be the deed so the deed again is the instrument or the document that's used to transfer title to real estate now think about this for a second let's say that you buy my house that's worth $100,000 now you're gonna give me $100,000 in cash let's say and in exchange for that I'm gonna give you a deed to the property now is there a law that says that I cannot have that cash under my mattress at home no I could keep that cash in a big shoebox under my mattress $100,000 in green but I don't do that not because there's a legal requirement that I put it in the bank but I put it in the bank cause it's safer there in theory now I gave you a deed to my house there's also no law that says that you can't keep that deed under your mattress at home but you don't keep it there where do you keep it the deed to your house now a lot of people say well in a safety deposit box but think about that do you think that every single homeowner in the entire United States has a safety deposit box at a bank where they keep their deed of course not you put your deed generally at the county recorders office you record it you make it public record that way the original don't do this but after you record it you know ability of confirmation that it's been recorded you could take a lighter and burn the original and it wouldn't matter why because you recorded it right it's safer at the County Recorder so we keep our money in the bank because it's safer we record our deeds because it's safer but there's no law that says that you have to do either so if you look at the very top of page number 97 you'll see some requirements for a valid deed now at the bottom of 96 you'll see two words that are pretty important Grand Tour and grantee now the Grand Tour is the person giving so if I sell you my house I'm the Grand Tour the grantee is the person receiving you by my house here the grantee now at the top of 97 you'll see these requirements for a valid deed notice if you look at these requirements the deeds got to be in writing it's got to have a granting clause meaning the words hereby grants but you don't see the word recording in the top of page number 97 because a deed actually does not need to be recorded in order to be what in order to be valid a deed does not need to be recorded in order to be valid in fact if you look here at the but if you look here at the bottom of page number 98 and all of 99 a deed doesn't even need to be notarized in order to be valid you'll see this term on pages 98 and 99 acknowledgement a deed does not need to be acknowledged in order to be valid again acknowledgement is just a fancy word for notarize so a deed doesn't need to be recorded and it doesn't need to be notarized in order to be valid but that's pretty stupid advice because most people record their deeds why because it's safer that way not because there's a legal requirement to do so but it's just safer to record it now what you do need to know on page number 99 is if you do want to record the deed if you do want to take the deed down to the County Recorder and record it the deed is going to be notarized it's gonna have to be notarized so check this out does the deed need to be recorded to be valid no does indeed need to be notarized or acknowledged to be valid no but it does need to be notarized in order to what in order to be recorded so deeds do need to be notarized in order to be recorded but neither of them are required for the validity of a deed now there's a bunch of different on page number 100 there's a bunch of different kinds of deeds you're always gonna see a word in front of the word deed for example a grant deed a grant deed at the bottom of page number 100 I've put a sample for you on page 101 but at the bottom of page number 100 a grant deed is the most common type of deed in California and candidly the reason that the grant deed is so common is because there are two really cool implied warranties inside of the grant deed now think of that what does the word warranty mean warranties like assurance of something or it's like you know it's like it's a guarantee of something basically the two implied warranties inside of a grant deed you'll see both of these at the bottom of page 101 of the implied warranties is that the property has not been previously conveyed what that means is imagine if you bought my house you give me a hundred thousand for the house and I gave you a deed how horrible would it be if you found out that six months ago I gave someone else a grant deed to that property and 90 days ago I give someone else a grant deed and I have some scam going where I take money and I give deeds to the same house to a bunch of people you can't do that it's fraudulent but you especially can't do that with a grant deed why because a grant deed has an implied warranty that the property has not been previously conveyed the second implied warranty with a grant deed is that the property is free of undisclosed encumbrances now what's an encumbrance and encumbrance is like you know a burden on the title like a lien for example now I could sell you my house that has a child support lien a property tax lien two mechanic's liens and a judgment on it pretty clouded the title but if I use a grant deed I gotta tell you about those deeds right I got to get rid of them or tell you about them the warranty and a grant deed is not that the property is free of all encumbrances it's just that it's free of those that I don't disclose to you so it's free of undisclosed encumbrances and the property has not been previously conveyed pretty important right now another type of deed on page 102 was called a gift deed now what gift deed is a deed that I'm giving to you as a gift I'm giving you a property as a gift now remember every contract has to have consideration we'll talk about this again in Chapter seven but every contract has to have consideration meaning there's got to be something of value that's exchanged from one party to the other so if I give you my house as a gift you got to give me something what are you giving me you're gonna give me love and affection whatever the hell that means but that's the words that would appear in a gift deed the words love and affection look at the next deed on page number 102 we got a quitclaim deed now a quitclaim deed think of that word quit claim you are quitting your claim to a property when you use a quit claim deed so a quit claim deed would be used for example to release interest in a property so if you and I own a building together and you're gonna buy me out I could use a quitclaim deed to release my interest in that property to you now a quitclaim deed has no warranties express or implied what that means is I could sign a quick claim deed on Kobe Bryant's house right now now do I have any interest in mr. Bryant's house of course not but by signing a quick claim deed I'm saying hey I release any and all interest I may have in that property the deed doesn't even have the implied warranty that I had any interest to begin with but a quitclaim deed is gonna release interest in a property but again a quitclaim deed doesn't even have the implied warranty that I had any interest to begin with so that's why generally a quitclaim deed should not be used in place of a grant deed if you can use a grant deed because at least a grant deed has a couple of those implied warranties that I mentioned earlier now look at the bottom of page 102 we got a warranty deed here now a warranty deed is no longer used in California why because candidly a warranty deed we don't need to waste the ink a warranty deed expressly spells out the warranties associated with the warranty deed we don't need to use we don't waste the ink with a warranty deed anymore why because we have the implied warranties in the grant deed plus we have title insurance that helps out a buyer in California so warranty deeds have Express warranties we don't need to waste the ink anymore we got the implied warranties in a grant deed plus we have title insurance that protects the buyer now if you look at page number 103 last couple kinds of deeds here we got the trust deed on page 103 now a deed of trust I'm gonna go over this a lot in Chapter 8 but a deed of trust is basically the California equivalent of a mortgage lenders in California don't use a morgue just anymore because mortgages generally require judicial foreclosure requires that the lender actually take the borrower to court in order to foreclose which sucks it just takes too damn long so we got rid of the mortgage and we replaced it with a security instrument called a deed of trust now your question might be well if we don't use mortgages anymore why the hell do we keep calling a mortgages if they're not mortgages frankly it's just habit right we just call them a mortgage even though we got a lot of words like that in English like q-tip or Kleenex or Xerox a lot of words that have an implication but they're not totally correct in terms of what the word is so a deed of trust way to borrow money now if you pay off your property you're of course gonna want the title back they'll give you a reconveyance deed here on page 103 so if somebody says hey look at this reconveyance Theed I just got what do you know they did they paid off a loan secured by a deed of trust so the lesson here really is that there's no one size fits all kind of deeds there's a bunch of different deeds in California and depending on the purpose you're gonna use a different deed I'll give you my property as a gift gift deed we do a regular real estate transaction you pay me I give you a deed grant d I'm releasing interest in a property quit claim deed I'm borrowing money to buy a piece of real estate trust deed now if I pay cash for your house I'm gonna pay cash you're gonna give me a grant deed now if I go get a loan I'm still gonna get a grant deed from you but I'm also gonna need a sign a trust deed to secure payment to my lender so again some transactions when you got a loan you actually have two deeds in that deal one deed to borrow money one deed from the seller to the buyer so again a deed transfers title to real estate but depending on the circumstances surrounding the transfer you may need to use a different kind of deed to accomplish your objective