The DirtLaw Blog

Easements: What are they and how are they created?

A little primer on easement law in California, brought to you by Simon O. Offord and I.

Definition: an easement is a non-possessory interest for the use of real property belonging to another for some specific stated purpose. 

            Law students are all taught that real estate is essentially a “bundle” of rights.  If you imagine that outright ownership is the entire bundle, an easement is something less than ownership and perhaps greater than a tenancy (lease).

Historically, easements were only allowed for right-of-way, support, light and air, and rights pertaining to artificial waterways.  Today, however, courts recognize easements for a much broader range of uses, including but not limited to utility lines and scenic views.  

            Before purchasing real estate, you should have a basic understanding about easements that affect, or may in the future, affect the property. 

California recognizes several different types of easements. 

Express Easement

            An express easement is created by specifically granting or reserving an easement to another by way of a deed or other legal instrument.  The express easement must be in writing, and it is advised you seek the assistance of a knowledgeable real estate attorney in order to ensure the easement is properly created and contains key terms such as how costs of road maintenance are shared and property tax contributions.  Additionally, easement disputes require civil engineers or surveyors to provide the exact property description for the easement area. 

A homeowner will typically see it in the language of the Grant Deed itself or referenced in the preliminary title insurance report.  A common example is a shared driveway where Property A owns the land but neighboring Property B has the express right to drive over Property A to get access to Property B.  Because Property B has the right-of-way over Property A, Property B is the “dominant tenement” and Property A is the “servient tenement.”

            An express easement is also the only easement that does not require litigation to create.  All the other forms of easements are creatures of law rather than of contract and generally require a Court order or litigation to achieve an express easement through settlement.

 

Easement by Implication

            In order to have an easement by implication, the owner of property must (1) convey or transfer a portion of property to another, (2) the owner’s prior existing use must have been of the nature that the parties must have intended or believed that the use would continue, and (3) the easement is reasonably necessary for the use and benefit of the land. 

 

Easement by Necessity

            An easement by necessity is exactly what it sounds like – it is an easement necessary for the owner to gain access to his or property because the parcel is “landlocked.”

            How does such a situation arise? An easement by necessity is created when the servient and dominant tenements were in common ownership at some point in time, and as a result of a conveyance by the common owner, one parcel became completely landlocked. 

            This situation is more common in rural areas or where there were originally large land grants to owners a few generations ago.  As each new owner inherits and subdivides and sells off a parcel, access to the remaining parcel is often overlooked.

            What this means is that there was originally one owner of the property in question, who thereafter divided the property, leaving one portion of the property (the dominant tenement) without access to the land, other than through the second portion (the servient tenement). 

Courts will therefore allow for an easement across the servient land for as long as the easement is strictly necessary to gain access to the landlocked property (note the distinction from an easement by implication, where there the use need only be reasonably necessary, whereas an easement by necessity requires strict necessity).       

 

Easement by Prescription

            An Easement by Prescription is one where someone who is not the owner of record, may use the land based on the time and nature of their use.  In other words, a squatter of sorts.

In order to have an easement by prescription, it must be shown that (1) the land was used continually for a period of five years, (2) possessed in a manner that was open, notorious and clearly visible to the owner of the burdened land, (3) hostile and adverse to the true owner, and (4) under a claim of right.

The law in California has really evolved on prescriptive easements, involving fact patterns where owners had installed elaborate landscaping, koi ponds and the like only to learn that they had improved their neighbor’s property. 

            California also has “good faith” improver statutes to compensate the mistaken improver.

Equitable Easement

            When the user cannot assert any of the above grounds for an easement, the court may exercise its equitable jurisdiction to issue a permanent injunction against interference with future use when (1) a party has used and improved an easement for a long period of time with an innocent belief that they have the right to use the land, (2) there would be irreparable harm if they could not continue to use the easement, and (3) the servient tenement would suffer little harm from the continued use.  

 

Assessing Your Rights

            Analyzing whether you may have right to an easement over your neighbor’s land, or your property may be burdened by any of the above types of easements is a very fact specific determination.  Do you have signs, have you paid taxes, who were the common owners, etc.  Additionally, the legal landscape has shifted frequently with regard to prescriptive easements so having a real estate attorney assist you in making this determination is recommended.  The above descriptions provide the basic considerations for the creation of easements, and whether or not an easement does in fact exist may hinge on additional factors specific to your particular situation.

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About the author:

Simon graduated from the University of California at Santa Barbara in 2005. Thereafter, he remained in Santa Barbarato work at a general litigation firm before attending law school at Santa Clara Universityand earning his Juris Doctorate in 2009.

As a student at Santa Clara University, Simon was named top of his class (receiving the CALI

or the Witkin Award) in four of his courses, in addition to graduating on the Dean’s List.  While attending law school, Simon clerked for a law practice that primarily focused on real estate litigation and transactions before becoming a clerk with the firm in 2009.  Simon’s experience includes law and motion practice and all stages of a civil trial. 

At the Law Offices of Peter N. Brewer, Simon works on matters representing real estate brokers, agents, and their clients as well as secured creditors in bankruptcy matters. 

California Foreclosure Consultants Now Must Register

After July 1, 2009, it became illegal to act as a Foreclosure Consultant in the State of California unless you registered first with the Attorney General. 

In addition to the $850 filing fee and the application and a copy of the contract you will use with your clients, you must be bonded at a minimum of $100,000.00 and register that bond with the California Secretary of State.

What is a "foreclosure consultant" as defined by California Law?
(California Civil Code 2945.1, "Mortgage Foreclosure Consultant Law")

The following definitions apply to this chapter:
 (a) "Foreclosure consultant" means any person who makes any
solicitation, representation, or offer to any owner to perform for
compensation or who, for compensation, performs any service which the
person in any manner represents will in any manner do any of the
following:
 (1) Stop or postpone the foreclosure sale.
 (2) Obtain any forbearance from any beneficiary or mortgagee.
 (3) Assist the owner to exercise the right of reinstatement
provided in Section 2924c.
 (4) Obtain any extension of the period within which the owner may
reinstate his or her obligation.
 (5) Obtain any waiver of an acceleration clause contained in any
promissory note or contract secured by a deed of trust or mortgage on
a residence in foreclosure or contained that deed of trust or
mortgage.
 (6) Assist the owner to obtain a loan or advance of funds.
 (7) Avoid or ameliorate the impairment of the owner's credit
resulting from the recording of a notice of default or the conduct of
a foreclosure sale.
 (8) Save the owner's residence from foreclosure.
 (9) Assist the owner in obtaining from the beneficiary, mortgagee,
trustee under a power of sale, or counsel for the beneficiary,
mortgagee, or trustee, the remaining proceeds from the foreclosure
sale of the owner's residence.

Loan Modification Failure Rate - 24% in 2 months.

as reported by the United States Office of Thrift Supervision, within six months after modification:

•  24% of the mortgages that had monthly payments reduced by 20 percent or more were 60 or more days past due versus
• 54% of mortgages with monthly payments if no loan mod.

See the June 30, 2009 quarterly report. 

This report went on to say, "Foreclosures in process increased.  Foreclosures in process also increased during the quarter to 844,389, or about 2.5 percent of all serviced loans, as moratoriums on foreclosures expired during the first quarter.  This increase represented a 22 percent jump from the previous quarter and a 73 percent rise from the first quarter of 2008."

So, despite an increasing number of loan mods offered, one in four of those borrowers still default within 2 months and we have a 73% jump in foreclosures compared to last year.

Does this sound to you like loan mods are working? I'm not convinced.  Nor am I convinced that we have hit the bottom of the residential cycle yet due to all this inventory in the foreclosure pipeline. 

Why aren't loan mods working? Human nature.  If you have a mortgage of $500k on your house in San Jose, California and your house is now worth $400k, are you going to keep paying your new lower interest payment?

Loan mods only modify the interest, not the principal.  Legislators should not modify the principals on these loans either because that would penalize the rest of the U.S. homeowners (over 90%) who pay their mortgages on time, borrowed what they could afford and should not be seeing their neighbor who put zero down and cashed out to buy a BMW get a lower principal on his or her mortgage.

Foreclosure Defense Lawsuits - California Attorney General Calls Them "Phony"

I posted previously about the foreclosure defense lawsuits.  They are also the "lost note" defense lawsuits that are hotly publicized.  Well, the lawyers who prey on these hopeful homeowners are are getting sued now by the California Attorney General, Jerry Brown. 

It's no secret that I represent many private money lenders.  That means that I see the full gamut of honest, but down-on-their-luck borrowers to the outright fraudsters and scammers that have defrauded my clients of their hard-earned retirement money and pension funds. 

Many of the foreclosure defense lawsuits in California were filed by an attorney named Mitchell W. Roth's firm.  These were cookie-cutter lawsuits filed that did nothing more than buy the homeowners a couple more months in the house.  Once these lawsuits were filed, lenders dealt with them easily as these lawsuits were flimsy and often meritless to begin with or were not even pursued by the Plaintiff's counsel.

What the California AG say?

"Noe and Roth ripped off homeowners desperate for help by charging unconscionable fees for phony lawsuits," Brown said. "Instead of aggressively pursuing the lawsuits, Noe and Roth strung them along so they could continue to rake in fees."

Beginning in mid-2008, Noe promised homeowners facing foreclosure or default he could help them lower or eliminate their mortgage debt.

He convinced more than 2,000 homeowners to sign "joint venture" agreements with his company, United First, and hire Roth to file suits claiming that the borrower's loan was invalid because the mortgages had been sold so many times on Wall Street that the lender could not demonstrate who owned it. Similar suits in other states have never resulted in the elimination of the borrower's mortgage debt.

After filing the lawsuits, Roth did virtually nothing to advance the cases. He often failed to make required court filings, respond to legal motions, comply with court deadlines, or appear at court hearings. Instead, Roth's firm simply tried to extend the lawsuits as long as possible in order to collect additional monthly fees.

So, don't take my word for it, look at the actions themselves.  These unscrupulous plaintiff's lawyers gave the struggling homeowners false hope and pocketed the fees that could have been applied to the loan to work out a loan modification or forbearance.

 

Mortgage Fraudsters Sentenced to 23 Years.

It took a long time, but after years of both criminal and civil litigation, the criminal case is finally coming to a close.

"Santa Clara County Superior Court Judge Vincent Chiarello sentenced Esperanza Valverde, 41, to 23 years and 8 months, and her husband, Herman Covarrubias, also 41, to 19 years and 8 months in prison. The couple was ordered to pay more than $900,000 in restitution to victims."

Full text here.

Among other dirty deeds, the shop that Covarrubias was running, Summit Mortgage (out of Milpitas) was accused to have supplied lenders with false tax returns, W-2 statements, pay stubs and employment verification letters.

It's no secret that underwriting over the years has been sloppy during the good times, but even the most lenient mortgage brokers shied away from outright forgery. 

The borrowers defaulted on the outrageous loans and some lost their homes.  How did the lenders fare?

"The banks were BNC Mortgage, which was shut down by Lehman Brothers before Lehman collapsed last year; Argent Mortgage and World Savings, which were acquired by other companies; GE's WMC Mortgage, which shut down in 2007; and Downey Savings, which was seized by regulators last year."

Having seen some of the loan docs, the question in my mind is what did the lenders think when they received a loan application where a blue-collar worker had a 6-figure salary?  I am not blaming the lenders for being defrauded, but I do think better safeguards should have been in place on the lender side as well.

Past Litigation is a Material Fact that Sellers are Obligated to Disclose By Julia M. Wei, Esq., Law Offices of Peter N. Brewer

In California, sellers have a legal obligation to disclose any material facts affecting the desirability of the property.  This duty is not only rooted in the common law, but statute as well, codified by California Civil Code Section 1102 et seq.  The sellers must complete the Transfer Disclosure Statement (“TDS”) and certify the information in the TDS.  Additionally, many organizations such as the California Association of Realtors® (C.A.R.) or the PRDS® Forms offer a Supplemental disclosure form as well for sellers to complete.

What should the Seller write on the TDS? Well, anything that affects the value or desirability of the property in the mind of a reasonable purchaser.  A common fact pattern that real estate litigators like myself often see is one where the seller of residential real estate has made a repair or a fix and fails to disclose the repair to the buyers.  The sellers take the position that the leaky roof/window/plumbing was repaired and so they had no reason to inform the buyer of the repair as the sellers no longer felt the property had a defect.  The buyers who are confronted with the leaky roof/window/plumbing (that apparently didn’t get fixed!) often feel that the sellers intentionally concealed the defect as any repair of water damage usually requires new paint or other cosmetic measures to address the water damage. 

 

When the sellers fail to disclose a material fact, and the buyer brings suit against them, this type of case is often referred to as the “bad house” case.  As most real estate purchase agreements contain mandatory mediation provisions, and many purchasers tend to initial the arbitration provision, much of the recent law on "bad house" cases is played out in a private forum with a private judge (arbitrator).  As attorneys, we are left with an older body of caselaw to extrapolate from about whether something is “material” and should be disclosed.

 

Accordingly, the recent case of Calemine v. Samuelson (Cal.2d February 17, 2009; B194461) was met with much attention in the real estate world as it was an opportunity to read an appellate decision regarding a “bad house” case.

 

Defendant Samuelson had purchased a condo in 1983.  In the nearly twenty years that he owned it, the condo had intermittent water intrusion and flooding.  He, along with some of his neighbors sued the developer.  Waterproofing and repairs were made in 1992. 

 

Apparently, when Samuelson sold his condo to Mr. and Mrs. Calemine in 2002, he filled out the Transfer Disclosure Statement and checked the box indicating he was aware of “Flooding, drainage or grading problems” and then added further, “Heavy rains below ground walls & slab.” [sic]

 

Samuelson also informed the buyers (perhaps verbally, as it is not clear from the record), there had been water intrusion and water damage in the past but that there had been extensive repairs that had solved the problem.  Samuelson did NOT disclose the two lawsuits.

In 2005, the condominium garage flooded twice, and twice more in 2006.  The Calemines sued Samuelson and the Homeowners Association and others, for nuisance, breach of contract, negligence and misrepresentation and concealment. 

 

Samuelson brought a motion for summary judgment at the trial court and prevailed but the Calemines took it up on appeal and the Appellate court concluded:

“…it is undisputed that Samuelson sufficiently disclosed the existence of the water intrusion itself.  He even urged the buyers to get their own inspection.  He failed however, to tell the buyers about the two lawsuits which had been filed.” 

 

The buyers testified (by declaration) that they would not have purchased the property if they had known about the prior lawsuits.  The Appellate court concluded there was a triable issue of fact regarding whether Samuelson was obligated to disclose the two lawsuits.

 

What this case illustrates is that when a seller makes the judgment call about what is material to the buyers, it can backfire.  It is what the buyer feels affects the desirability and value of the condominium that gives rise to a legitimate dispute. 

 

Here, the seller clearly disclosed the defect itself, but failed to disclose that the defect (water intrusion and flooding) had been so severe as to warrant two lawsuits from the owners.  Had the buyers known, they could have reviewed the pleadings and discovered that the repairs were possibly insufficient.  With that information, the buyers could have either backed out of the transaction with a justified excuse or negotiated a deeper discount or repair credit.  Seller’s failure to disclose the lawsuits removed that choice from buyers.

Collecting on the Deficiency Judgment.

Below is an excerpt of an article that was published in the Winter 2008 Points of Interest for California Mortgage Broker Association members:

Sold Out Junior Lienholder With a Deficiency Judgment? Now It’s Time To Collect
by Julia M. Wei, Esq, The Law Office of Peter N. Brewer

If you were the prevailing party, the attorney who handled your litigation will usually prepare and record an Abstract of Judgment for you.  However, that is as far as their collection efforts often go.  It is then up to the judgment creditor to engage a collection specialist to enforce the judgment against the judgment debtor.

1.  The Sit and Wait Method Recording an Abstract of Judgment is a passive means of judgment enforcement.  It is a lien against the debtor’s real property in a particular county.  Accordingly, if the debtor owns property in multiple counties, a creditor should have multiple Abstracts of Judgment issued by the Court and record them in all the counties the debtor is believed to own real property.

TIP Abstracts are good for as long as the Judgment.  A judgment expires after 10 years if not renewed.  Accordingly, if the creditor knows the debtor has relatives that he or she may inherit real property from, the creditor should also record in that county because the abstract of judgment will attach to the new property at the time the conveyance.  The creditor should also set up a calendaring reminder to RENEW the judgment in a timely fashion.

Back in the heyday of refinance loans, creditors were often paid because the debtor eventually would take some equity out of their home and the new loan paid off the liens.  These days, that scenario is less likely.

Additionally, abstracts can be lost to foreclosure, wiped out by the senior lienholders, or expire after 10 years. Judgment creditors may want to be more aggressive. 

 

2. Examining the Debtor and Taking the Money Out of Their Wallet A judgment creditor can have the Court issue an Order to Appear for Debtor’s Examination (OEX) and serve post-judgment discovery regarding the debtor’s financial accounts. 

Service of the OEX and post-judgment discovery is also a way to get the Debtor to start calling the creditor, rather than the Debtor avoiding the creditor’s phone calls.

The OEX is challenging to execute because it must be personally served on the debtor and the debtor may be an expert at dodging service.  However, assuming service is accomplished, two things could happen.  1) the debtor could appear; or 2) the debtor could fail to appear and the Judge can issue a bench warrant.

TIP   If the debtor does appear (the OEX is conducted at the courthouse), then creditor’s counsel can slap a Turnover Order on the debtor and get whatever assets are present that day – i.e., debtor’s watch, car, cash in their wallet. 

3.  Seize Their Car and/or Boat This only works if the debtor actually owns their car.  However, once you have a judgment, you may also have grounds to have a licensed personal investigator make inquiries of the DMV records.  The first step in any seizure is to obtain a Writ of Execution from the Court after the asset report is obtained from an investigator.

The seizure method is costly but effective.  Seizure of personal property requires the Sheriff to get involved, and requires up front deposits with the Sheriff’s department.

TIP When the car is garaged, the creditor must obtain a seizure order that allows the deputy to enter private property (garage or marina) to seize the vehicle.

FOR THE FULL TEXT - GO HERE.

Defending Against the "Foreclosure Defense" lawsuit.

There's a new litigation trend we've been seeing in California - the rise of the "foreclosure defense" lawsuits.

Basically these lawsuits allege that the lender no longer owns the original promissory note and therefore cannot foreclose on the borrower's property.  Of course, to keep things interesting, the lawsuit alleges all manner of violations of any lending statute they can think of from TILA to RESPA to HOEPA and the Fair Debt Collection laws.

Additionally, the mortgage broker, the appraiser and even the Realtor are roped in as defendants.

In short these cookie-cutter lawsuits are  sham lawsuits intended to extort a few more months of free rent.  The very nature of these lawsuits is offensive to law-abiding citizens who pay their bills. 

Instead, these plaintiff-homeowners in the "foreclosure defense" lawsuits have been misled by foreclosure defense gurus to believe they should be entitled to own the house "free and clear" despite not having paid off their mortgage loan.

This smacks of the same rhetoric the Mortgage Elimination folks used a few years back.  Of course, the perpetrators of the Dorean Group mortgage elimination scheme were both sentenced to over twenty years imprisonment.

The law does not support the theories espoused by these new foreclosure defense gurus and early law and motions efforts are key in discouraging these lawsuits.

Guaranty, Guarantee, Potato, Potahto…

For many private money investors (or hard money lenders as they are sometimes referred to), a loan to an LLC alone carries too many risks.  Accordingly, a personal guarantee from the managing member or other members of the LLC with collateral will be required.

 

Since the underlying loan obligation to the LLC was secured by a deed of trust against real estate—and the real estate values have plummeted, we are seeing a rise in the number of lawsuits by lenders against guarantors to enforce of the guarantee agreements.

How do California’s anti-deficiency provisions protect guarantors?  They don’t.  Well, not exactly.

In the seminal case of Union Bank v. Gradsky, the court first enumerated the Gradsky doctrine and found that while the legislature did not intend for anti-deficiency statutes (California Code of Civil Procedure Sections 580(b) and 580(d)) to protect guarantors, that the doctrine of estoppel prevented lenders from going after the guarantor once the lender had already foreclosed on the collateral.*

 

The reasoning was that once a guarantor pays the debt of another, the guarantor assumes the rights of the lender/creditor and should be entitled to pursue the borrower to recover the losses.  Accordingly, if the lender has already foreclosed on the collateral, they have prevented the guarantor from going after the collateral and harmed the guarantor by altering the position of the parties from the time of the bargained for guarantee.

 

Accordingly, most savvy transactional lawyers who draft guarantees will include contractual Gradsky waivers as enumerated by Civil Code Section 2856 which states:

 

§ 2856. Waiver of suretyship rights and defenses; contract language; effectiveness; applicability; validity of waivers executed prior to January 1, 1997

(a) Any guarantor or other surety, including a guarantor of a note or other obligation secured by real property or an estate for years, may waive any or all of the following:

(1) The guarantor or other surety's rights of subrogation, reimbursement, indemnification, and contribution and any other rights and defenses that are or may become available to the guarantor or other surety by reason of Sections 2787 to 2855, inclusive.

(2) Any rights or defenses the guarantor or other surety may have in respect of his or her obligations as a guarantor or other surety by reason of any election of remedies by the creditor.

(3) Any rights or defenses the guarantor or other surety may have because the principal's note or other obligation is secured by real property or an estate for years. These rights or defenses include, but are not limited to, any rights or defenses that are based upon, directly or indirectly, the application of Section 580a, 580b, 580d, or 726 of the Code of Civil Procedure to the principal's note or other obligation.

(b) A contractual provision that expresses an intent to waive any or all of the rights and defenses described in subdivision (a) shall be effective to waive these rights and defenses without regard to the inclusion of any particular language or phrases in the contract to waive any rights and defenses or any references to statutory provisions or judicial decisions.

(c) Without limiting any rights of the creditor or any guarantor or other surety to use any other language to express an intent to waive any or all of the rights and defenses described in paragraphs (2) and (3) of subdivision (a), the following provisions in a contract shall effectively waive all rights and defenses described in paragraphs (2) and (3) of subdivision (a):

The guarantor waives all rights and defenses that the guarantor may have because the debtor's debt is secured by real property. This means, among other things:

(1) The creditor may collect from the guarantor without first foreclosing on any real or personal property collateral pledged by the debtor.

(2) If the creditor forecloses on any real property collateral pledged by the debtor:

(A) The amount of the debt may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price.

(B) The creditor may collect from the guarantor even if the creditor, by foreclosing on the real property collateral, has destroyed any right the guarantor may have to collect from the debtor.

This is an unconditional and irrevocable waiver of any rights and defenses the guarantor may have because the debtor's debt is secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the Code of Civil Procedure.

(d) Without limiting any rights of the creditor or any guarantor or other surety to use any other language to express an intent to waive all rights and defenses of the surety by reason of any election of remedies by the creditor, the following provision shall be effective to waive all rights and defenses the guarantor or other surety may have in respect of his or her obligations as a surety by reason of an election of remedies by the creditor:

The guarantor waives all rights and defenses arising out of an election of remedies by the creditor, even though that election of remedies, such as a nonjudicial foreclosure with respect to security for a guaranteed obligation, has destroyed the guarantor's rights of subrogation and reimbursement against the principal by the operation of Section 580d of the Code of Civil Procedure or otherwise.

(e) Subdivisions (b), (c), and (d) shall not apply to a guaranty or other type of suretyship obligation made in respect of a loan secured by a deed of trust or mortgage on a dwelling for not more than four families when the dwelling is occupied, entirely or in part, by the borrower and that loan was in fact used to pay all or part of the purchase price of that dwelling.

(f) The validity of a waiver executed before January 1, 1997, shall be determined by the application of the law that existed on the date that the waiver was executed.

 

A lender has a few choices when they are faced with going after collateral with declining value and a loan guarantee.  The lender can 1) conduct a non-judicial foreclosure and walk away from the guarantee; or 2) conduct a judicial foreclosure and sweep in the guarantee claims and name both the borrower and the guarantor; or 3) go after the guarantor for the entire amount owed.

 

Additionally, if the guarantee contains all the necessary waivers, the lender can both non-judicially foreclose on the collateral and go after the guarantor for the deficiency owed.

 

*The court also reiterated that the “one-action rule” (C.C.P. §726) did not apply to  guarantees.   

Lis Pendens - What Is It and How Does it Affect Title?

I recently wrote an article for the Foreclosures.com newsletter, October 2008:

Excerpted:

 

In California, the purpose of the Lis Pendens is to give constructive notice to the public at large that this property has a lawsuit pending that could affect whether or not the owner of record has the right to sell it, put it up as collateral for a loan or otherwise transfer it.  The technical aspects of filing and recording Notice of Pendency of Action are enumerated under §§405–405.6 of the California Code of Civil Procedure. 

 

As recently as 2004, the California Supreme Court concluded that Code of Civil Procedure section 405.20 provides that, “a lis pendens may be filed by any party in any action who asserts a ‘real property claim’…(Kirkeby v. The Superior Court of Orange County (2004) 33 Cal.4th 642.) In that particular case, the plaintiffs had alleged a fraudulent transfer of the property had occurred. 

 

Any investor planning on acquiring or lending against a property with a recorded lis pendens needs to do careful investigation. At the bare minimum, the investor should obtain the operative court pleadings. The lis pendens should contain the case number and the county the action is filed in, as well as the names of the parties.    Some counties like Alameda county and San Francisco county make their court documents available online for instant access and without charge. 

 

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Click HERE for the full text of the article, or please visit: http://www.brewerfirm.com/article-LisPendens.html