May 16th, 2016 at 7:50 pm
Question: Can a child own real property?
Answer: Yes. Until the age of 18, a child has no legal capacity to enter into a valid contract to buy or sell real property (unless the child is emancipated). But a child can own real property in his or her own name. After all, a child need not sign anything to receive real property as a gift or inheritance.
Once on title, a child may need to get a court-appointed guardian ad litem to do what adult homeowners do, depending on the circumstances. For instance, if the child wants to rent out the property, no one is likely to care if the child’s parent signs as the landlord on the lease without getting court approval. But if the child wants to sell the property or get a loan, the title company is highly unlikely to insure title unless the child obtains a guardian ad litem appointed through the court process, and the guardian signs the deed instrument as the child’s representative.
Of course it would have been much better for the person who transferred title to the child to have set up a trust for the child instead, given that the court process for appointing a guardian ad litem can be difficult, costly, and time-consuming. But that doesn’t mean that a transfer of title to a child is invalid.
Legal Resource:? You and your clients may be interested in a recently updated publication called “Kids & the Law” (also in Spanish) from the California State Bar. The 16-page booklet covers topics such as social networking, driving, drugs and alcohol, privacy, curfew, truancy, and much more.
May 9th, 2016 at 7:56 pm
Question: I’m the listing agent. The buyer and seller agreed to a Request for Repairs (RR). In paragraph 1(a), where the form has blank lines to insert the buyer’s requests, the buyer wrote: “See attached Addendum.” On the Addendum, the buyer requested for the seller to do Section 1 termite work. In looking at the RR form, the buyer could have just checked the box in paragraph 1(b)(i) for the seller to do Section 1, or even the box in paragraph 1(b)(ii) for the seller to do Section 2. Neither boxes were checked. Nothing in paragraph 1(b) was marked. Yet, the buyer’s side is now demanding that we comply with paragraph 1(b)(iii) which states: “If Buyer requests either Section 1 or Section 2 work above, Seller shall, no later than 5 Days Prior to Close of Escrow, Deliver to Buyer a written pest control certification.” Is the seller required to do the termite work at least 5 days before close of escrow?
Answer: Yes. You have definitely stumbled upon an ambiguity created by the pre-printed language on the RR form. On one hand, if the buyer failed to check either box in paragraph 1(b)(i) or (ii), arguably paragraph 1(b)(iii) does not apply. After all, paragraph 1(b)(iii) refers to the “Section 1 or Section 2 work above”, whereas the buyer’s request for Section 1 is not really “above,” given that it’s on a separate addendum. On the other hand, however, paragraph 1(a) of the RR specifically states that the buyer requests that the seller takes the specified actions before the final walk-through. Moreover, paragraph 15 of the Residential Purchase Agreement (RPA) gives the buyer the right to a final walk-through up to 5 days before close of escrow to confirm that repairs have been completed. Also, regardless of the RR form, paragraph 16 of the RPA independently requires all repairs to be completed before the final walk-through anyway (unless otherwise agreed in writing).
-Thank you to Daniel Banchik for suggesting this week’s legal tip.
May 2nd, 2016 at 6:44 am
Question: My buyer wrote a non-contingent offer that the seller has accepted. We have not yet received any disclosures, such as the Transfer Disclosure Statement (TDS). Can my buyer cancel now, or does he have to wait until he receives the disclosures before cancelling?
Answer: The buyer should generally wait before cancelling. If the buyer knows for a fact that the seller will agree to mutually cancel before the delivery of disclosures, he can go ahead and cancel now. However, that’s not something the buyer usually knows about, in which case, the buyer should wait. The TDS law specifically states that the buyer has “three days after delivery in person” to cancel (or 5 days after delivery by mail). The buyer also has a similar 3-day cancellation right for some of the other statutory disclosures, including the Natural Hazard Disclosure (NHD), Mello-Roos taxes, and 1915 Bond Act assessments.
What you are essentially asking is whether the buyer has an absolute right to cancel under the TDS and other statutory laws. The law does not say for certain one way or the other, but the answer is likely to be “no.” When a buyer has already entered into a purchase agreement with the seller, they owe each other a duty to act in good faith and deal fairly. Cancelling under the 3-day right to rescind before receipt of the TDS could potentially be construed as acting in bad faith. Even after receipt of the TDS, cancelling could still be construed as acting in bad faith if, for example, the TDS discloses nothing of significance to the buyer. Of course, whether the TDS discloses something significant to the buyer is often difficult for a seller to ascertain. But consider the other statutory laws. Assume that a disclosure states that the property is not located in any of the flood, fire, or earthquake hazard zones under the NHD law, or that the home is not in a Mello-Roos or 1915 Bond Act district. If a buyer nevertheless elects to exercise a 3-day right to cancel upon receipt of these “good news” disclosures, a seller may be able to successfully argue that the buyer has acted in bad faith.
-Thank you to Fred Coleman for suggesting this week’s legal tip.
April 25th, 2016 at 10:34 pm
Question: I just submitted an offer on my buyers’ behalf. My buyers signed the offer on Page 9 of the Residential Purchase Agreement (RPA). But the listing agent said she will not present our offer to the seller until the buyers insert their initials at the bottom of the last page (Page 10) where it says “Buyer Acknowledges that page 10 is a part of this Agreement.” Can the listing agent do that? Are the initials on the last page legally required?
Answer: As to your first question, the answer is “it depends.” Both the MLS rules and the NAR Code of Ethics require a listing agent to present an offer as soon as possible. However, the problem is we don’t know if the listing agent decided not to present your buyers’ offer on her own or with the seller’s permission. If she made the decision on her own, she has violated the MLS and ethics rules (not to mention her fiduciary duty to the seller). If the listing agent has the seller’s permission (and no ulterior motives), she has not violated the rules.
As to your second question, the answer is “no.” Because the buyers’ signatures are now on Page 9 instead of Page 10 of the RPA, C.A.R. added a place at the bottom of Page 10 for the buyers to acknowledge receipt of that page by inserting their initials. Having the buyers’ initials on Page 10 is not legally required, but it is definitely a good way to show that the buyers have reviewed and agreed to that last page.
The ultimate question in your situation is whether you should challenge what the listing agent is saying or get the buyers’ initials. I’d generally recommend doing? both. Tell the listing agent that her request is highly unusual, given that your attorney has already told you that the buyers’ initials on Page 10 are not legally required, and at the same time, get your buyers’ initials anyway and resubmit their offer.
-Thank you to Bill Taylor for suggesting this week’s legal tip.
April 18th, 2016 at 8:35 pm
Question: I often hear other agents use the word “escrow” to refer to the fact that a buyer and seller are in contract with one another, such as:
•? “We opened escrow.”
•? “We’re in escrow.”
•? “We haven’t closed escrow.”
•? “Escrow has not been cancelled.”
Is having a pending escrow file the same thing as having a “valid contract”?
Answer: No. In practice, we often use these phrases to describe a pending sales transaction. However, from a legal standpoint, whether the parties have a valid contract depends on whether they entered into an agreement and are performing the terms of that agreement. Of course, the fact that the parties have a pending escrow file tends to show that the parties have a valid contract. But the ultimate determination as to whether a contract is valid depends on all the facts and circumstances, not just whether the parties have a pending escrow file. Hence, when you are a buyer’s agent, and your buyer has just received an accepted offer, don’t be fooled if the listing agent says, “Your buyer doesn’t have a valid contract because we haven’t opened escrow yet.” Or when you are a listing agent, and the buyer has failed to perform on a pending transaction, don’t believe a buyer’s agent who says, “Your seller must sell to my buyer and no one else, because we are in escrow.” Parties can have a valid contract but no pending escrow file, or they can have a pending escrow file, but no obligation to perform.
