September 10, 2015

Property Ownership - Evidence Code Section 662

When a person claims to own a piece of property, the first step is to ascertain title. That is, one needs to look at basically the most recently recorded deed for the property. The reason for this is that California law strongly presumes that the name on title is the actual owner. Evidence Code § 662 states "the owner of the legal title to property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof."

Ascertaining title is particularly important in estate administration. For example, if an only child can show that title to a piece of property was solely owned in the name of their parent, who was either a widow or widower, they would likely be entitled to solely inherit the property assuming the parent did not write a will. Conversely, if the only child shows that title was held in the name of the parent's trust, inheritance would not be a given for the child. An examination of the trust would be needed to figure out the beneficiaries, which may or may not include the child. Furthermore, if the parent held the property in joint tenancy, the surviving joint tenant would likely inherit the property from them regardless of whether they wrote a will or not.  In short, it is easy to see how title can dictate an outcome.

The reason for the qualification, i.e. "likely inheritance," is due to the fact that the name on title is not absolutely the true owner. A person whose name is on title could have acquired it through unlawful means. This may take the form of undue influence, coercion, duress, etc. If such means were used, there are legal remedies to reform title. However absent those circumstances, it is difficult to rebut the presumption that the name on title is not the true owner. The reason being is that one needs "clear and convincing evidence" to rebut the presumption that the name on title is not the true owner. While there is no magic formula for qualifying "clear and convincing evidence," it is a high enough standard such that a significant degree of certainty is needed to meet that threshold.  

It is worth mentioning the difference between legal title and beneficial title (also known as equitable title). The statute uses these terms when describing property ownership. The holder of legal title is the one with the authority to sell, lease, mortgage, etc. the property. The beneficial title holder is the one who can take legal action against the legal title holder for mistakes involving the property. A common example of where you see this arrangement is if a trust owns a piece of property and the trustee and beneficiary are different people. The trustee is said to have legal title and the beneficiary is said to have beneficial title. The trustee's name will be on the deed but the beneficiary's name will not. However, if the trustee commits a breach of trust, the beneficiary can sue the trustee for redress of injury.