April 11, 2013

Property Ownership

When a person inherits a piece of property, a question that naturally arises is "when does that person's interest in the property vest?" Or in other words, "when did that person become the property's owner?"

This is an important legal question because ownership gives the owner a bundle of legal rights. For example, ownership gives a property owner the ability to occupy, modify, improve, buy, sell, lease and exclude others from such property. 

The California Probate Code says this on the following subject:

"Subject to Section 7001, title to a decedent’s property passes on the decedent’s death to the person to whom it is devised in the decedent’s last will or, in the absence of such a devise, to the decedent’s heirs as prescribed in the laws governing intestate succession." Prob C § 7000.

You might then wonder, what does Prob C § 7001 entail? It reads as follows:

"The decedent’s property is subject to administration under this code, except as otherwise provided by law, and is subject to the rights of beneficiaries, creditors, and other persons as provided by law. Prob C § 7001." 

A common scenario where property ownership is important is when a relative has been staying with the decedent at their home. The following illustration encapsulates a scenario I have heard numerous times over the years.

Randy is a mooch and asks his Aunt Bee if he can stay with her at her country estate in Portola Valley. Aunt Bee is a widow without any chidren and longs for company at her huge home and pities Randy so she decides to take her nephew in. Aunt Bee then writes a will which bequeaths the entire home to her nephew Rufus, a modest man who lives with a spendthrift wife and sells women's shoes at the local mall. Rufus is Randy's brother. Aunt Bee does not believe that Randy should inherit anything because he is a scrounger and Rufus is a tireless worker. One day Aunt Bee passes away in a horrible canoe accident. Rufus retrieves the will from Aunt Bee's safe deposit box and reads that the country estate was bequeathed to him. Rufus retains counsel and his attorney informs him that he technically became owner of the home the moment Aunt Bee died, citing Prob C § 7000.

Rufus believes that Randy exploited Aunt Bee's kindness and demands that Randy leave the home immediately. Randy objects and says that he has squatter's rights and moreover, Rufus must complete probate before title will transfer to him. Rufus then asks his attorney to speak to Randy. His attorney informs Randy that title passed to Rufus on Aunt Bee's death and thereby he was he owner of the property and could make tenancy determinations. Consequently, Rufus was of the belief that Randy's tenancy was over and asked him to leave or face eviction. The attorney also explained that squatter's rights are the stuff of legal fiction. Randy then left the country estate in hopes of finding another sympathetic relative so he could freeload at their home.