PAPERWORK TRAPS IN TITLE AND DEEDS

Title and deeds should be carefully crafted.  Obtaining the services of an actual title or real estate lawyer is not too high a price to pay.  Title transfers, especially in settlement of threatened or pending litigation, have to be carefully scrutinized.

In Melvin Morris v First Bethany Missionary Baptist Church, Cal. App., Slip. Op., 2016 (not for publication), the church owned two parcels.  Upon one was built the church and part of the parking lot and on the second was built the remainder of the parking lot.  The church fell on hard times and rather than lose the property in foreclosure agreed to transfer one of the lots to the creditor.  To accomplish this, on church letterhead, in a document probably drafted by the pastor or a well-meaning member, the transfer was set forth in an agreement of a single page.  A deed was drafted to effectuate the transfer.  But, the deed and the agreement did not match because in one the legal description only reached one parcel but in the other the legal description reached both parcels.  Of course, the document that reached both parcels was the deed and it was filed of record.

The creditor’s action against the church was dismissed when the agreement and deed were created.  When the church discovered the mistake, it filed an action to have the deed set aside.  The case was dismissed because the church claim should have been brought in the creditor’s original suit as a mandatory counterclaim.  Without the counterclaim, the deed stood unchallenged.

The church argued that it did not discover the scope of the deed until the creditor dismissed.  However, the three year statute had run and the new case filed by the church was barred.

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