Sometimes real property rights can be tried in a criminal case where the owner is not even a party | Patton Sullivan Brodehl LLP

This post was primarily written by Zachary B. Young, a “rising star” for four consecutive years who was recently elevated to Partner at Patton Sullivan Brodehl LLP.

Owners of real estate generally understand that their property rights may be affected by litigation in which they are a party. However, what is less clear, but perhaps equally important to understand and avoid, is that property rights can even be affected by litigation in which the owner is not a party.

This is exactly what happened to a non-party buyer of real estate in a recent criminal case released by the Court of Appeals for the First District of California – People vs. Miller — in which a deed of grant to the acquirer has been declared void, even on the basis of due process objections.

Facts of People vs. Miller

An elderly property owner, Sara J., fell behind on her property taxes and faced foreclosure. Sara was eventually approached by a real estate agent, Tonika Miller, who convinced Sara that it would be a good strategy to get a reverse mortgage to pay her property taxes and save her house.

However, when the time came for Sara to sign the relevant documents, Miller provided Sara with a purchase agreement instead. Sara signed the purchase agreement thinking she was signing a reverse mortgage and unknowingly deeded her home to Rex Regum, LLC, a company owned by Miller’s employer. Rex Regum then sold the property to a third party, Lion Share Investments, LLC, who had no idea the property had been purchased through fraud.

Eventually, authorities became aware of Miller’s crimes, and the district attorney charged her with multiple criminal offenses stemming from Sara’s transfer of ownership to Rex Regum and then Lion Share. Miller pleaded no contest and admitted to procuring and offering a false document to be filed in a state public office and registered under state law in violation of California Penal Code Section 115 .

Shortly after the criminal complaint against Miller was filed, Lion Share filed a separate civil suit to protect its purchase and ownership of the property. Before the silent title action could go to trial, in the criminal action, the state filed a motion for cancel the act pass Sara’s house to Rex Regum.

Lion Share, while not a party to the criminal case, was given the opportunity to oppose the motion. Lion Share argued that it was a bona fide buyer and argued that the trial court should defer to silent title action as the proper forum to adjudicate real estate rights. respective parties.

The trial court disagreed with Lion Share and granted the motion quashing Sara’s deed of grant to Rex Regum, thereby also voiding the sale to Lion Share.

Lion Share appealed and continued to argue that, under due process, the criminal court should have deferred to Lion Share’s pending silent title action to allow a full judgment of its property claim.

Case outcome

The Court of Appeal disagreed with Lion Share and upheld the lower court’s decision. The court held that Lion Share’s due process rights had not been violated in the trial court, despite the fact that Lion Share’s proprietary rights to the property had been fully adjudicated in a criminal action in which Lion Share was not even a party.

The court explained that Lion Share had notice of the criminal action and specifically the motion to reverse Sara’s transfer of ownership to Rex Regum. Lion Share also had the opportunity to file multiple briefs, submit evidence and present oral arguments in the criminal proceedings, and did so. The fact that Lion Share had a silent title action simultaneously pending had no consequence. The criminal court was not required to refer the real estate dispute to civil quiet title litigation.

Course

Although the typical route by which a property owner’s rights are judged is through a civil action in which he is a party, the People vs. Miller reminds owners to be on their guard against any legal proceedings in which their property rights are attacked, including those in which they are not even a party.

Whenever there is a legal proceeding that could affect a landlord’s rights to land, even if that proceeding is other than a typical civil suit in which land rights are adjudicated, the landlord should take advantage of any opportunity to present its position and protect its rights. Landlords cannot assume that their property rights will not be affected simply because they are not a party to the case.

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