Acquirement of Property by Law Operation or “Operation of Law”

Acquirement of property by operation of law is in which someone acquires certain rights or responsibilities automatically under the law, without taking individual action or being the subject of a court order. For example, when one joint tenant dies, any surviving joint tenants obtain title to the jointly owned property; when someone dies without a will, the person’s legal heirs automatically become entitled to inherit property from the estate. Other examples of law operation are when a spouse in a community property estate take title to all community property if the other spouse dies without a will, or a guardianship of a minor ad litem (for purposes of a lawsuit) ends automatically upon the child turning 18.

This term is applied to those rights which are cast upon a party by the law, without any act of his own, such as when the right to an estate of one who dies intestate is cast upon the heir at law by operation of law; or when a lessee for life enfeoffs him in reversion; or when the lessee and lessor join in a feoffment; or when a lessee for life accepts a new lease; or of demise from the lessor, there is a surrender of the first lease by operation of law. 9 B. & C. 298; 5 B. & C. 269; 2 B. & A. 119; 5 Taunt. 518.

Property Rights and Real Estate Law

Trying to decipher an acronym? Attempting to understand legal jargon? The Property Rights and Real Estate Law page give you access to definitions for the Property Rights and Real Estate legal terminology commonly used in documents and court proceedings. This Property Rights and Real Estate Law page will help you understand the legal terms and phrases which are relevant to buying a home, landlord issues, and other areas of Property Rights and Real Estate Law.

Some assets pass outside of your will by operation of law or law operation. This means that there’s a law on the books that causes or permits an asset to pass to a beneficiary without going through probate.

Real Estate

You may own real estate with another person. Whether that property will pass by operation of law depends upon the “magic words” on the deed. If you bought your house with your spouse prior to April 4, 1985, and have certain magic words on the deed, you may have an “entireties deed,” or if you bought your house with anyone else, including your spouse, you might have a “joint tenancy with survivorship” deed. If you bought a house with someone else after that date, you might have a survivorship deed. It all depends on the magic words. With the right magic words, the house will pass to the surviving spouse or other person named in the deed by law operation. In the event the magic words are missing, your interest passes under the terms of your will.

Motor Vehicles

You may own a car or alternative vehicle with a certificate of title. If it was issued after July 23, 2002, it may have a second name on it, either as a Transfer on Death beneficiary or as a survivorship beneficiary. If so, so long as the beneficiary or co-tenant has survived you, upon your death, regardless of what’s in your will, the property will pass to the named beneficiary or co-tenant.

“Operation of Law” or Law Operation Postponements under C.C. 2924g

Recently, the California Court of Appeal (Second Dist.- Los Angeles) made a determination of whether a sale trustee’s five postponements were excessive. Specifically, The Court examined whether the foreclosure trustee’s five sale postponements during an appeal were required “by operation of law” or were instead discretionary and violative of Civil Code § 2924g limit of three postponements without a re-notice of the sale.

Under the California Civil Code, 2924g(c)(1), a sale trustee has the discretion to postpone the sale three times, before the trustee is required to publish a new notice of sale. There are a few statutory exceptions laid out in CC§2924(c)(2) under which a trustee must postpone the sale: by order of the Court, or when stayed by operation of law or by mutual agreement of the parties.

Generally, when citing “operation of law” or law operation for the reason to postpone a sale, it is almost always due to the automatic stay from a bankruptcy petition filing. In Royal Thrift and Loan Company vs. County Escrow, Inc. (2004 DJDAR 12668, Filed Oct. 15, 2004), the Court decided whether the operation of law exception also applied to the “automatic stay” of Code of Civil Procedure §916. That code suspends enforcement of a judgment on appeal, but CCP §916 had not been evaluated before as to whether it applied to prevent a trustee from conducting a non-judicial foreclosure sale during the appeal.

In the Royal Thrift case, property owners Arthur and Rosalie Jones sued lender Royal Thrift and Loan, County Escrow Inc., and notary public Michelle Kramer for negligence and fraud in connection with a fraudulent loan taken out by their son, Jeff Jones, and his two associates, Sam Favata and Ruben Sanchez. Jeff Jones, Favata, and Sanchez forged Jeff’s parent’s signatures on a promissory note and deed of trust securing a loan on Arthur and Rosalie’s residence. Kramer notarized the documents and County Escrow accepted the documents and distributed Royal Thrift’s loan proceeds to Jeff, Favata, and Sanchez. Later the loan went into default and Royal Thrift asserted that it was entitled to foreclose on the $192,039.74 obligation.

The trial court entered judgment in favor of Arthur and Rosalie against Jeff Jones, Favata, and Sanchez. The court also entered judgment for Royal Thrift, determining that Royal Thrift held a valid first deed of trust on the Joneses residence. The trial court found that the Joneses had ratified the loan because they had been aware of the fraudulent loan for over two years but, to protect their son, did not challenge it. Royal Thrift was also awarded judgment against Kramer and County Escrow and against Star Insurance, an issue of Kramer’s fidelity bond. The judgment stated that in the event the future foreclosure sale failed to fully compensate Royal Thrift, Royal Thrift would be entitled to damages against Kramer, County Escrow, and Star for the difference between the loan balance and its credit bid at the sale.

In the first of two appeals, in this case, the Joneses appealed from this judgment. Kramer, County Escrow, and Star Insurance cross-appealed. Royal Thrift appealed the trial court’s denial of its request for attorney fees under the tort-of-another doctrine. Most of the appeals were dismissed as being premature since the trial court had reserved jurisdiction to finally determine Royal Thrift’s damages when the foreclosure sale was completed.

Following the first appeal, Royal Thrift conducted its foreclosure sale and bought the property for $139,000. It then made a motion for an additional sum and the Court modified the judgment to award Royal Thrift an additional $56,575.72. Kramer, County Escrow, and Star Insurance (hereafter, collectively “County Escrow”) then brought their second appeal from the modified judgment, contending the trial court ignored major procedural defects in Royal Thrift’s non-judicial foreclosure sale. County Escrow contended that Royal Thrift postponed the sale more than the three times allowed by statute for discretionary postponements, as opposed to postponements required by law operation.

Non-judicial foreclosures are governed by a comprehensive statutory scheme found in Civil Code §§ 2924 through 2924k, and a properly conducted sale “constitutes a final adjudication of the rights of the borrower and lender.” [6 Angels, Inc., v. Stuart-Wright Mortgage, Inc. (2001) 85 Cal.App.4th 1279, 1283-1284]. As a general rule, there is a common law rebuttable presumption that a sale has been conducted regularly and fairly. [6 Angels at pg. 1284]. In addition, there’s a statutory presumption that the recital in the trustee’s deed that all statutory requirements for notice and sale have been satisfied is prima facie evidence of compliance and conclusive evidence of compliance in favor of a bona fide purchaser or encumbrancer. [Civil Code 2924].

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