The Heggstad petition procedure, which allows California courts to confirm that a specific asset belongs to a revocable living trust based on the trust document’s language rather than requiring formal retitling of the asset before the settlor’s death, has been successfully applied to a wide range of asset types. But real property presents specific challenges that make Heggstad petitions for real estate more demanding than Heggstad petitions for financial accounts or personal property. California’s strong formality requirements for real property transfers, the requirement that real property transfers be documented in a deed recorded with the county recorder, and the third-party reliance interests that the public recording system is designed to protect all create legal considerations that courts weigh carefully when evaluating whether a Heggstad petition for real property should be granted.
Why Real Property Requires More Than Other Assets
California’s Statute of Frauds and the requirements of Civil Code Section 1091 provide that transfers of real property must be in writing and signed by the person making the transfer. The recorded deed system further requires that transfers of real property be documented in a deed that is recorded with the county recorder’s office to be effective against third parties and to provide constructive notice of the ownership. These formality requirements exist to protect third parties who deal with real property in reliance on the recorded title, and courts granting Heggstad petitions for real property must address how a trust’s right to an undeeded property can be established through a court order in a way that is consistent with these formality requirements and that protects the interests of parties who may have relied on the recorded title in dealing with the property.
What Language in the Trust Document Supports a Real Property Heggstad Petition
Courts granting Heggstad petitions for real property have typically required trust document language that specifically describes the real property to be held in trust, whether by legal description, by street address, or by other identifying information sufficient to distinguish the specific parcel. A general trust provision declaring that all of the settlor’s property is held in trust has been held sufficient in some cases to support a Heggstad petition for real property, but courts have been more reluctant to grant real property Heggstad petitions based solely on general assignment language than for financial accounts and personal property. The more specific the trust document’s identification of the real property, and the more contemporaneous evidence of the settlor’s intent to hold that specific property in trust, the stronger the Heggstad petition for the real property will be.
Title Insurance and Post-Heggstad Recording
After a court grants a Heggstad petition confirming that a specific real property belongs to the trust, the trustee must record a certified copy of the court order with the county recorder to establish the trust’s title in the public record. The recorded court order serves as the documentation of the trust’s interest that subsequent purchasers, lenders, and title insurers will evaluate when dealing with the property. Title companies may require additional documentation about the trust and the trustee’s authority before issuing title insurance for subsequent transactions involving Heggstad-confirmed title, and anticipating these requirements in the planning of the Heggstad proceeding can avoid delays when the trustee later wants to sell or refinance the property. The California Legislature’s Probate Code Section 850 provides the court’s authority for these confirmatory orders. Working with experienced attorneys who provide Heggstad and Probate Code Section 850 guidance gives trustees dealing with unfunded real property the specific real estate-focused analysis these more demanding petitions require.