Understanding Real Property Interests and Deeds
By Brad Dashoff and John Antonacci
Understanding Real Property Interests
As you might remember from your property class in law school, real property interests can be acquired and held in several different ways, including as an owner, a possessor, or a party entitled to some future or contingent interest. This article briefly touches on the most common real property interests, and how such interests might be typically applied in “real-world” transactions.
Fee Simple Interest. The most common estate for owning a real property interest is the “fee simple absolute,” often shortened to “fee simple.” A fee simple property interest is the broadest estate described under law, and has the following distinguishing features: (i) the owner of a fee simple property interest has the sole power to dispose of such property interest; (ii) upon the current owner’s death, and in the absence of instruction (i.e., a will), the property interest automatically transfers to an owner’s heirs; and (iii) the property interest continues until the current holder dies without heirs. In most situations when a single buyer wishes to acquire real property, typically such buyer will want to acquire a fee simple interest (with no others having joint interests, future interests, or possessory interests that could supplant the buyer’s interest in the real property).
Joint Estates. Joint estates allow two (or more) parties to own title to real property at the same time. However, there are different types of joint estates, each with distinguishing characteristics:
Joint Tenancy. In order to have a joint tenancy, four different “unities of ownership” are required:
- Time. Each owner must receive title at the same time.
- Title. Each owner must receive title via the same deed or instrument.
- Interest. Each owner must receive the same proportionate and equal share of ownership.
- Possession. Each owner must have the identical right of possession. Unlike a tenancy in common (discussed later), a joint tenancy includes the right of survivorship (i.e., the interest held by each joint tenant, upon the death of such joint tenant, will pass to the other joint tenants). If a joint tenant sells or conveys its interest in the real property to a third party, then the joint tenancy is broken, and a tenancy in common is deemed to have been created.
Tenancy by the Entirety. This is a specific type of joint tenancy that arises between a husband and wife when a single instrument conveys real property, but nothing is stated in the conveying instrument about the nature of such couple’s ownership. A tenancy by the entirety entitles a surviving spouse to take title to all of the real property upon the death of the other spouse.
Tenancy in Common. With a tenancy in common, there is no limit as to the number of individuals who can share ownership of a particular parcel of real property. Tenants in common hold one unity or requirement that is similar to a joint tenancy: the right of possession. However, unlike joint tenancies, upon the death of a co-tenant, the interest of the deceased will pass to such co-tenant’s heirs (not to the other co-tenants). This type of co-ownership allows each co-owner to choose who will inherit the tenant in common interest upon such co-owner’s death. Tenancies in common have often been used among co-owners of multi-unit properties, who each wish to have exclusive usage rights to a particular area of the property, without the formalities associated with establishing condominium regimes, or when ownership needs to be separately held for other reasons (e.g., in connection with a property exchange pursuant to Section 1031 of the Internal Revenue Code [IRC] of the United States). Although each tenant in common owns an undivided property interest (i.e., none of the tenants can exclude the others from any portion of the property), the rights of particular tenants in common can be limited and modified by contract, using what is commonly called a “Tenants In Common” or “TIC” Agreement. Under a TIC Agreement, and unlike joint tenancies, the tenants in common can agree to have unequal shares in the underlying real property. One key feature that may be included in a TIC Agreement is an option that allows some owners to buy out the interests of the other tenants in common. If considering such a mechanism, then the parties must negotiate to establish when the buy-out may be exercised, when or if an exercised buy-out can be refused, and what are the agreed upon buy-out prices. Since the laws governing joint estates and tenancies in common can vary from jurisdiction to jurisdiction, the drafter of such contracts must be aware of the pertinent local laws, which could potentially supersede any written TIC Agreements.
Future Interests and Possessory Interests
Future Interests. When your client is deciding whether or not to acquire a particular property interest, it is important to determine whether any future or contingent interests in such property exist. A future interest may exist with a prior owner of such property (as with a right of reversion), or a contingent interest may exist with third parties (as with options to purchase, or rights of first offer).
It is more common to encounter rights of reversion when a prior owner of a particular parcel of property was a governmental or municipal entity, and in such cases, typically the reversionary right is triggered when the current property owner fails to comply with certain covenants, conditions, or restrictions placed upon the property. For example, when the government conveys property to a developer to build and lease affordable housing for the citizenry, the government places covenants, conditions, and restrictions on the property, which run with the land (i.e., cannot be changed), and which limit the use of the property for that particular purpose. If the developer fails to comply with those covenants, conditions, and restrictions, then the government retains the right to recapture the property from the developer. Note that some states limit the ability to create revisionary interests, and others may not enforce them if the restriction on use violates public policy.
A real-world example of a future interest can typically be found when a large landowner (such as a farm) sells its property in phases. In these cases, the buyer may want the right to buy more of the seller’s property, once the seller decides to sell more. As a result, the buyer often negotiates for a purchase option and right of first refusal, to be recorded in the land records, which specifies that before the remainder of the seller’s property can be sold, it must first be offered to the buyer (often at a stated price, or some discount of market), and the buyer then has the option to purchase that property.
Possessory Interests. The most common form of possessory interest is the leasehold estate, which you may recall includes the following varieties:
- the tenancy for years (i.e., a tenancy whose duration is known from the moment of its creation);
- the periodic tenancy (e.g., a month-to-month lease);
- the tenancy at will (i.e., a tenancy that may be terminated by either the landlord or the tenant upon notice); and
- the tenancy at sufferance (i.e., a tenancy arising when a party wrongfully remains in possession after a prior, lawful possession expired).
In today’s world of commercial real estate transactions, the most common form of leasehold interest is the tenancy for years.
Deeds are the legal documents that transfer ownership of real property interests from one party to another. Although deeds tend to be fairly short documents, they embody the whole purpose behind the underlying transaction (the transfer of real property), and therefore the deed is an essential component of every real estate purchase and sale transaction. Upon consummation of the real property transaction, the deed is recorded at the local county courthouse or recorder’s office where the property is physically located. In a deed, generally the party conveying the property is called the “grantor,” while the party receiving the property is called the “grantee.” Often, the grantee will want to require that the deed contain certain covenants of title, or assurances that the grantor possesses good and marketable title, with the right to convey the property free and clear from undisclosed encumbrances. Different types of deeds offer varying levels of a grantor’s covenants of title, and following is a general description of each type of deed. However, it is important to note that:
- Although different states may use the same term for a particular type of deed (e.g., a “general warranty deed”), the covenants of title actually required for that deed could vary by jurisdiction.
- Different states and local jurisdictions have differing requirements for the types of deeds that may be used when conveying real property interests, including differing requirements for the form and presentation of the deed.
- Therefore, a lawyer must be familiar with the laws of the jurisdiction where the property is physically located prior to preparing and submitting a deed for recordation.
Deeds are fairly short documents that tend not to be technically complex. The following paragraphs will provide an overview of the typical qualities and characteristics for the following most common types of deeds, which will help determine the type of deed that may be appropriate for your client’s needs. Keep in mind that state laws vary and the prudent practitioner needs to check local statutes to ensure they use the proper form of deed. The most common types of deeds include:
- General warranty deeds
- Special warranty deeds
- Grant deeds
- Quitclaim deeds
General Warranty Deed
A buyer of real property is best protected by having the property conveyed via a general warranty deed. A general warranty deed expressly guarantees the grantor’s good and marketable title to the property and the grantor’s unfettered right to sell the property to the grantee. The guarantee is not limited to only the time the grantor owned the property, but instead extends to the entire chain of the property’s ownership (as may be limited in time by certain state or local statutes). In other words, the grantor not only guarantees that clear title was received from the previous owner of the property, but also guarantees that no other parties, past or present, retain an interest in the property. In addition, a general warranty deed also typically includes the following covenants of title:
Covenant of Seisin: A covenant that the grantor has an estate (or the right to convey an estate) of the quality and size that the grantor purports to convey (i.e., the grantor has both title to and possession of the property at the time of conveyance to the grantee).
Covenant to Convey Free from Encumbrances: A covenant that the property is being conveyed to the grantee without any liens or encumbrances (except for those specifically disclosed in the deed).
Covenant of Quiet Enjoyment: A covenant ensuring that the grantee will not be disturbed, or dispossessed of the property, by grantor or a party having a lien or superior title (claimed by or through grantor or any of grantor’s predecessors in title).
Covenant to Defend Title: Most importantly, a covenant ensuring the defense of title against claims of all third parties (even if the claim related to a prior period when the property was owned by a party other than the grantor and grantee), and if title is discovered to not be clear (also known as “defective” title), then grantor will compensate the grantee for any resulting damages. Some examples of defects in title include claims of previously unknown heirs, claims of lenders/mortgagees, outstanding tax liens, judgment liens, or materialmen’s liens.
Special Warranty Deed
With a special warranty deed, the grantor limits the title warranty given to the grantee to anyone claiming by, from, through, or under the grantor (but not any predecessors in title). By using a special warranty deed, the grantor is only warranting to defend title against grantor’s own actions or omissions, and the grantor does not warrant to defend against title defects that existed before the grantor’s ownership of the property. The special warranty deed is not nearly as protective of the buyer as is the general warranty deed, and therefore, sellers prefer special warranty deeds over general warranty deeds for conveying real property interests.
The argument of whether to use a special warranty deed over a general warranty deed revolves around the question as to which party is in the best position to know about title defects, and how the risk of title defects should be allocated. Although sellers are arguably better positioned than buyers to discover (or have knowledge of) title defects, realistically, sellers cannot be expected to research the entire historical chain of title for a given property. As a result, most sophisticated parties rely on title insurance, which covers many types of losses that may occur if title defects are discovered. Before issuing title insurance policies, most title companies will perform a thorough search of the applicable title records to determine whether any title defects are present. If a buyer of real property is able to obtain title insurance, then that buyer need not be as concerned with accepting a special warranty deed in lieu of a general warranty deed.
Grant deeds are distinguished from warranty deeds (whether general or special) in that grant deeds do not require the grantor to defend title claims (whether for all time as with a general warranty deed, or only during grantor’s ownership of the property as with a special warranty deed). Note that grant deeds are not universally available in all states, so be sure to check local statutes to determine whether use of this deed type is permitted. Typically, a grant deed only contains the following covenants of title:
- A covenant that the grantor has not previously sold the real property interest now being conveyed to the grantee.
- A covenant that the property is being conveyed to the grantee without any liens or encumbrances (except for those specifically disclosed in the deed).
In review, a grant deed transfers a grantor’s ownership interest in real property, and covenants that title has not already been transferred to another party or been encumbered (except as explicitly set forth in the deed). By contrast, a warranty deed also transfers a grantor’s ownership interest in real property, and explicitly warrants to the grantee that: (i) the grantor has good and marketable title to the property, and (ii) the grantor agrees to defend the grantee against third-party claims to title of the property.
A quitclaim deed conveys a grantor’s complete interest in real property, but does not warrant or profess that the grantor’s claim of title is actually valid. In other words, a quitclaim deed only transfers whatever ownership interest a grantor has in a particular property, but makes no guarantees about the extent of the grantor’s interest in such property, if any. Essentially, a quitclaim deed only conveys to a grantee whatever rights the grantor has in the subject property, and makes no assurances or warranties that the grantor actually has a valid ownership interest in the subject property, but if the grantor does possess a valid ownership interest, then grantor conveys such ownership rights to the grantee. When a buyer accepts a quitclaim deed, then that buyer also accepts the risk that the grantor may not have a valid ownership interest in the property being conveyed, and there may be additional ownership interests or claims to title. Title insurance companies may be reluctant to issue title insurance policies if the subject property was conveyed to the proposed insured (i.e., the buyer) using a quitclaim deed.
Quitclaim deeds are most frequently used when there is a potential for a title defect (sometimes referred to as a “cloud” on the chain of title). Common instances where quitclaim deeds may be appropriate include:
- when there is uncertainty about whether a particular heir of a prior property owner may have a claim to the property;
- when a party may have acquired title to the property by adverse possession;
- when the division of property is necessary for divorcing couples, with one spouse signing all of his or her rights in a particular piece of real property over to the other spouse; or
- when there is a possibility that another party may have some other type of remaining interest in the property (e.g., a leasehold interest of a former tenant, or an outstanding option to purchase the property), and the current owner or prospective buyer of such property wants such other party to disclaim any such interest.
Be careful when considering a quitclaim deed, since it cuts off claims against prior owners. If the use of a quitclaim deed is part of a related party or internal transfer (e.g., as part of an estate plan), then it is important to consider purchasing an endorsement to the title policy (if available and cost effective) to ensure the grantee can claim against and through the grantor’s title insurance policy.
The Commercial Real Estate Lawyer's Job
Did you find this article helpful? Do you think more information like this would help you? More information is available. This material is excerpted from The Commercial Real Estate Lawyer's Job, 2009, by Brad Dashoff and John Antonacci, published by the American Bar Association General Practice, Solo and Small Firm Division. Copyright © 2009 by the American Bar Association. Reprinted with permission. All rights reserved. This information or any or portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. GP/Solo members can purchase this book at a discount.
Brad Dashoff is a senior associate in the real estate group of Pillsbury Winthrop Shaw Pittman, LLP (McLean, Virginia office). His practice includes a variety of real estate matters, such as acquisitions and dispositions of commercial properties, commercial lending, mixed use development, and the creation of private equity funds to invest in real estate.
John Antonacci is vice president and deputy general counsel of Atlantic Realty Companies, Inc., which is a full-service commercial real estate company that owns and manages a portfolio of approximately five million square feet of office and retail space throughout Virginia and Maryland. He is involved in a wide variety of real estate and corporate matters, including the following primary areas: purchase and sale transactions, commercial leasing (with a specialty in retail leasing), and commercial lending. Before joining Atlantic Realty Companies, Inc., he was a senior associate in the real estate group of Pillsbury Winthrop Shaw Pittman, LLP (McLean, Virginia office).
© Copyright 2011, American Bar Association.
(a) A written assignment of an interest in leases, rents, issues, or profits of real property made in connection with an obligation secured by real property, irrespective of whether the assignment is denoted as absolute, absolute conditioned upon default, additional security for an obligation, or otherwise, shall, upon execution and delivery by the assignor, be effective to create a present security interest in existing and future leases, rents, issues, or profits of that real property. As used in this section, “leases, rents, issues, and profits of real property” includes the cash proceeds thereof. “* * * Cash proceeds” means cash, checks, deposit accounts, and the like.
(b) An assignment of an interest in leases, rents, issues, or profits of real property may be recorded in the records of the county recorder in the county in which the underlying real property is located in the same manner as any other conveyance of an interest in real property, whether the assignment is in a separate document or part of a mortgage or deed of trust, and when so duly recorded in accordance with the methods, procedures, and requirements for recordation of conveyances of other interests in real property, (1) the assignment shall be deemed to give constructive notice of the content of the assignment with the same force and effect as any other duly recorded conveyance of an interest in real property and (2) the interest granted by the assignment shall be deemed fully perfected as of the time of recordation with the same force and effect as any other duly recorded conveyance of an interest in real property, notwithstanding a provision of the assignment or a provision of law that would otherwise preclude or defer enforcement of the rights granted the assignee under the assignment until the occurrence of a subsequent event, including, but not limited to, a subsequent default of the assignor, or the assignee's obtaining possession of the real property or the appointment of a receiver.
(c) Upon default of the assignor under the obligation secured by the assignment of leases, rents, issues, and profits, the assignee shall be entitled to enforce the assignment in accordance with this section. On and after the date the assignee takes one or more of the enforcement steps described in this subdivision, the assignee shall be entitled to collect and receive all rents, issues, and profits that have accrued but remain unpaid and uncollected by the assignor or its agent or for the assignor's benefit on that date, and all rents, issues, and profits that accrue on or after the date. The assignment shall be enforced by one or more of the following:
(1) The appointment of a receiver.
(2) Obtaining possession of the rents, issues, or profits.
(3) Delivery to any one or more of the tenants of a written demand for turnover of rents, issues, and profits in the form specified in subdivision (k), a copy of which demand shall also be delivered to the assignor; and a copy of which shall be mailed to all other assignees of record of the leases, rents, issues, and profits of the real property at the address for notices provided in the assignment or, if none, to the address to which the recorded assignment was to be mailed after recording.
(4) Delivery to the assignor of a written demand for the rents, issues, or profits, a copy of which shall be mailed to all other assignees of record of the leases, rents, issues, and profits of the real property at the address for notices provided in the assignment or, if none, to the address to which the recorded assignment was to be mailed after recording.
Moneys received by the assignee pursuant to this subdivision, net of amounts paid pursuant to subdivision (g), if any, shall be applied by the assignee to the debt or otherwise in accordance with the assignment or the promissory note, deed of trust, or other instrument evidencing the obligation, provided, however, that neither the application nor the failure to so apply the rents, issues, or profits shall result in a loss of any lien or security interest that the assignee may have in the underlying real property or any other collateral, render the obligation unenforceable, constitute a violation of Section 726 of the Code of Civil Procedure, or otherwise limit a right available to the assignee with respect to its security.
(d) If an assignee elects to take the action provided for under paragraph (3) of subdivision (c), the demand provided for therein shall be signed under penalty of perjury by the assignee or an authorized agent of the assignee and shall be effective as against the tenant when actually received by the tenant at the address for notices provided under the lease or other contractual agreement under which the tenant occupies the property or, if no address for notices is so provided, at the property. Upon receipt of this demand, the tenant shall be obligated to pay to the assignee all rents, issues, and profits that are past due and payable on the date of receipt of the demand, and all rents, issues, and profits coming due under the lease following the date of receipt of the demand, unless either of the following occurs:
(1) The tenant has previously received a demand that is valid on its face from another assignee of the leases, issues, rents, and profits sent by the other assignee in accordance with this subdivision and subdivision (c).
(2) The tenant, in good faith and in a manner that is not inconsistent with the lease, has previously paid, or within 10 days following receipt of the demand notice pays, the rent to the assignor.
Payment of rent to an assignee following a demand under an assignment of leases, rents, issues, and profits shall satisfy the tenant's obligation to pay the amounts under the lease. If a tenant pays rent to the assignor after receipt of a demand other than under the circumstances described in this subdivision, the tenant shall not be discharged of the obligation to pay rent to the assignee, unless the tenant occupies the property for residential purposes. The obligation of a tenant to pay rent pursuant to this subdivision and subdivision (c) shall continue until receipt by the tenant of a written notice from a court directing the tenant to pay the rent in a different manner or receipt by the tenant of a written notice from the assignee from whom the demand was received canceling the demand, whichever occurs first. This subdivision does not affect the entitlement to rents, issues, or profits as between assignees as set forth in subdivision (h).
(e) An enforcement action of the type authorized by subdivision (c), and a collection, distribution, or application of rents, issues, or profits by the assignee following an enforcement action of the type authorized by subdivision (c), shall not do any of the following:
(1) Make the assignee a mortgagee in possession of the property, except if the assignee obtains actual possession of the real property, or an agent of the assignor.
(2) Constitute an action, render the obligation unenforceable, violate Section 726 of the Code of Civil Procedure, or, other than with respect to marshaling requirements, otherwise limit any rights available to the assignee with respect to its security.
(3) Be deemed to create a bar to a deficiency judgment pursuant to a provision of law governing or relating to deficiency judgments following the enforcement of any encumbrance, lien, or security interest, notwithstanding that the action, collection, distribution, or application may reduce the indebtedness secured by the assignment or by a deed of trust or other security instrument.
The application of rents, issues, or profits to the secured obligation shall satisfy the secured obligation to the extent of those rents, issues, or profits, and, notwithstanding any provisions of the assignment or other loan documents to the contrary, shall be credited against any amounts necessary to cure any monetary default for purposes of reinstatement under Section 2924c.
(f) If cash proceeds of rents, issues, or profits to which the assignee is entitled following enforcement as set forth in subdivision (c) are received by the assignor or its agent for collection or by another person who has collected such rents, issues, or profits for the assignor's benefit, or for the benefit of a subsequent assignee under the circumstances described in subdivision (h), following the taking by the assignee of either of the enforcement actions authorized in paragraph (3) or (4) of subdivision (c), and the assignee has not authorized the assignor's disposition of the cash proceeds in a writing signed by the assignee, the rights to the cash proceeds and to the recovery of the cash proceeds shall be determined by the following:
(1) The assignee shall be entitled to an immediate turnover of the cash proceeds received by the assignor or its agent for collection or any other person who has collected the rents, issues, or profits for the assignor's benefit, or for the benefit of a subsequent assignee under the circumstances described in subdivision (h), and the assignor or other described party in possession of those cash proceeds shall turn over the full amount of cash proceeds to the assignee, less any amount representing payment of expenses authorized by the assignee in writing. The assignee shall have a right to bring an action for recovery of the cash proceeds, and to recover the cash proceeds, without the necessity of bringing an action to foreclose a security interest that it may have in the real property. This action shall not violate Section 726 of the Code of Civil Procedure or otherwise limit a right available to the assignee with respect to its security.
(2) As between an assignee with an interest in cash proceeds perfected in the manner set forth in subdivision (b) and enforced in accordance with paragraph (3) or (4) of subdivision (c) and another person claiming an interest in the cash proceeds, other than the assignor or its agent for collection or one collecting rents, issues, and profits for the benefit of the assignor, and subject to subdivision (h), the assignee shall have a continuously perfected security interest in the cash proceeds to the extent that the cash proceeds are identifiable. For purposes hereof, cash proceeds are identifiable if they are either (A) segregated or (B) if commingled with other funds of the assignor or its agent or one acting on its behalf, can be traced using the lowest intermediate balance principle, unless the assignor or other party claiming an interest in proceeds shows that some other method of tracing would better serve the interests of justice and equity under the circumstances of the case. The provisions of this paragraph are subject to any generally applicable law with respect to payments made in the operation of the assignor's business.
(g)(1) If the assignee enforces the assignment under subdivision (c) by means other than the appointment of a receiver and receives rents, issues, or profits pursuant to this enforcement, the assignor or another assignee of the affected real property may make written demand upon the assignee to pay the reasonable costs of protecting and preserving the property, including payment of taxes and insurance and compliance with building and housing codes, if any.
(2) On and after the date of receipt of the demand, the assignee shall pay for the reasonable costs of protecting and preserving the real property to the extent of any rents, issues, or profits actually received by the assignee, provided, however, that no such acts by the assignee shall cause the assignee to become a mortgagee in possession and the assignee's duties under this subdivision, upon receipt of a demand from the assignor or any other assignee of the leases, rents, issues, and profits pursuant to paragraph (1), shall not be construed to require the assignee to operate or manage the property, which obligation shall remain that of the assignor.
(3) The obligation of the assignee hereunder shall continue until the earlier of (A) the date on which the assignee obtains the appointment of a receiver for the real property pursuant to application to a court of competent jurisdiction, or (B) the date on which the assignee ceases to enforce the assignment.
(4) This subdivision does not supersede or diminish the right of the assignee to the appointment of a receiver.
(h) The lien priorities, rights, and interests among creditors concerning rents, issues, or profits collected before the enforcement by the assignee shall be governed by subdivisions (a) and (b). Without limiting the generality of the foregoing, if an assignee who has recorded its interest in leases, rents, issues, and profits prior to the recordation of that interest by a subsequent assignee seeks to enforce its interest in those rents, issues, or profits in accordance with this section after any enforcement action has been taken by a subsequent assignee, the prior assignee shall be entitled only to the rents, issues, and profits that are accrued and unpaid as of the date of its enforcement action and unpaid rents, issues, and profits accruing thereafter. The prior assignee shall have no right to rents, issues, or profits paid prior to the date of the enforcement action, whether in the hands of the assignor or any subsequent assignee. Upon receipt of notice that the prior assignee has enforced its interest in the rents, issues, and profits, the subsequent assignee shall immediately send a notice to any tenant to whom it has given notice under subdivision (c). The notice shall inform the tenant that the subsequent assignee cancels its demand that the tenant pay rent to the subsequent assignee.
(i)(1) This section shall apply to contracts entered into on or after January 1, 1997.
(2)Sections 2938 and 2938.1, as these sections were in effect prior to January 1, 1997, shall govern contracts entered into prior to January 1, 1997, and shall govern actions and proceedings initiated on the basis of these contracts.
(j) “Real property,” as used in this section, means real property or any estate or interest therein.
(k) The demand required by paragraph (3) of subdivision (c) shall be in the following form:DEMAND TO PAY RENT TOPARTY OTHER THAN LANDLORD(SECTION 2938 OF THE CIVIL CODE)
Tenant: [Name of Tenant]
Property Occupied by Tenant: [Address]
Landlord: [Name of Landlord]
Secured Party: [Name of Secured Party]
Address: [Address for Payment of Rent to Secured Party and for Further Information]:
The secured party named above is the assignee of leases, rents, issues, and profits under [name of document] dated ___, and recorded at [recording information] in the official records of ___ County, California. You may request a copy of the assignment from the secured party at ___ (address).
THIS NOTICE AFFECTS YOUR LEASE OR RENTAL AGREEMENT RIGHTS AND OBLIGATIONS. YOU ARE THEREFORE ADVISED TO CONSULT AN ATTORNEY CONCERNING THOSE RIGHTS AND OBLIGATIONS IF YOU HAVE ANY QUESTIONS REGARDING YOUR RIGHTS AND OBLIGATIONS UNDER THIS NOTICE.
IN ACCORDANCE WITH SUBDIVISION (C) OF SECTION 2938 OF THE CIVIL CODE, YOU ARE HEREBY DIRECTED TO PAY TO THE SECURED PARTY, ___ (NAME OF SECURED PARTY) AT ___ (ADDRESS), ALL RENTS UNDER YOUR LEASE OR OTHER RENTAL AGREEMENT WITH THE LANDLORD OR PREDECESSOR IN INTEREST OF LANDLORD, FOR THE OCCUPANCY OF THE PROPERTY AT ___ (ADDRESS OF RENTAL PREMISES) WHICH ARE PAST DUE AND PAYABLE ON THE DATE YOU RECEIVE THIS DEMAND, AND ALL RENTS COMING DUE UNDER THE LEASE OR OTHER RENTAL AGREEMENT FOLLOWING THE DATE YOU RECEIVE THIS DEMAND UNLESS YOU HAVE ALREADY PAID THIS RENT TO THE LANDLORD IN GOOD FAITH AND IN A MANNER NOT INCONSISTENT WITH THE AGREEMENT BETWEEN YOU AND THE LANDLORD. IN THIS CASE, THIS DEMAND NOTICE SHALL REQUIRE YOU TO PAY TO THE SECURED PARTY, ___ (NAME OF THE SECURED PARTY), ALL RENTS THAT COME DUE FOLLOWING THE DATE OF THE PAYMENT TO THE LANDLORD.
IF YOU PAY THE RENT TO THE UNDERSIGNED SECURED PARTY, ___ (NAME OF SECURED PARTY), IN ACCORDANCE WITH THIS NOTICE, YOU DO NOT HAVE TO PAY THE RENT TO THE LANDLORD. YOU WILL NOT BE SUBJECT TO DAMAGES OR OBLIGATED TO PAY RENT TO THE SECURED PARTY IF YOU HAVE PREVIOUSLY RECEIVED A DEMAND OF THIS TYPE FROM A DIFFERENT SECURED PARTY.
[For other than residential tenants] IF YOU PAY RENT TO THE LANDLORD THAT BY THE TERMS OF THIS DEMAND YOU ARE REQUIRED TO PAY TO THE SECURED PARTY, YOU MAY BE SUBJECT TO DAMAGES INCURRED BY THE SECURED PARTY BY REASON OF YOUR FAILURE TO COMPLY WITH THIS DEMAND, AND YOU MAY NOT BE DISCHARGED FROM YOUR OBLIGATION TO PAY THAT RENT TO THE SECURED PARTY. YOU WILL NOT BE SUBJECT TO THOSE DAMAGES OR OBLIGATED TO PAY THAT RENT TO THE SECURED PARTY IF YOU HAVE PREVIOUSLY RECEIVED A DEMAND OF THIS TYPE FROM A DIFFERENT ASSIGNEE.
Your obligation to pay rent under this demand shall continue until you receive either (1) a written notice from a court directing you to pay the rent in a manner provided therein, or (2) a written notice from the secured party named above canceling this demand.
The undersigned hereby certifies, under penalty of perjury, that the undersigned is an authorized officer or agent of the secured party and that the secured party is the assignee, or the current successor to the assignee, under an assignment of leases, rents, issues, or profits executed by the landlord, or a predecessor in interest, that is being enforced pursuant to and in accordance with Section 2938 of the Civil Code.
Executed at __________, California, this ___ day of _______, ___.
Read this complete California Code, Civil Code - CIV § 2938 on Westlaw
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