Sometimes Real Property Rights Can be Adjudicated in a Criminal Case Where the Property Owner is Not Even a Party
This post was primarily authored by Zachary B. Young, a “Rising Star” for four years running who was recently elevated to Partner at Patton Sullivan Brodehl LLP.
Owners of real property generally understand that their property rights can be impacted by litigation in which they are a party. However, what’s less clear, but perhaps equally important to understand and guard against, is that property rights may even be impacted by litigation in which the owner is not a party.
This is exactly what happened to a non-party purchaser of real property in a recent criminal case published by California’s First District Court of Appeal — People v. Miller — in which a grant deed to the purchaser was declared void, even over due process objections.
Facts of People v. Miller
An elderly landowner, Sara J., fell behind on her property taxes and faced foreclosure. Sara was eventually approached by a real estate salesperson, Tonika Miller, who convinced Sara it would be a good strategy to secure a reverse mortgage to pay off her property taxes and save her home.
However, when it came time for Sara to sign the relevant paperwork, Miller provided Sara a purchase agreement instead. Sara signed the purchase agreement thinking she was signing for a reverse mortgage and unknowingly deeded her house to a 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 that the property had been procured by fraud.
Eventually, the authorities became aware of Miller’s crimes and the District Attorney charged her with several criminal offenses arising from the transfer of the property from Sara to Rex Regum and subsequently to Lion Share. Miller pled no contest and admitted to procuring and offering a false document to be filed in a state public office and recorded under state law in violation of California Penal Code section 115.
Shortly after the criminal complaint was filed against Miller, Lion Share filed a separate civil quiet title action to protect its purchase and ownership of the property. Before the quiet title action could be adjudicated, in the criminal action the State filed a motion to void the deed conveying Sara’s home to Rex Regum.
Lion Share, while a non-party in the criminal case, was given the opportunity to oppose the motion. Lion Share contended it was a bona fide purchaser, and argued that the criminal trial court should defer to the quiet title action as the appropriate forum for adjudicating the parties’ respective real property rights.
The trial court disagreed with Lion Share and granted the motion voiding the grant deed from Sara to Rex Regum, thus also voiding the sale to Lion Share.
Lion Share appealed and continued to argue that as a matter of due process, the criminal court should have deferred to Lion Share’s pending quiet title action to afford a full adjudication of its claim to the property.
The Court of Appeal disagreed with Lion Share and affirmed the criminal trial court’s ruling. The court held that Lion Share’s due process rights were not violated in the trial court despite the fact that Lion Share’s ownership rights in the property were 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 seeking to void the property transfer from Sara to Rex Regum. Lion Share also had the opportunity to, and did, file multiple briefs, submit evidence, and make oral arguments in the criminal proceedings. The fact that Lion Share had a simultaneously pending quiet title action was of no consequence. The criminal trial court was not required to refer the real property dispute to the quiet title civil proceeding.
Although the typical path whereby a real property owner’s rights are adjudicated is through a civil action in which they are a party, the People v. Miller case reminds property owners to be on guard against any legal proceedings in which their property rights are being attacked, including ones in which they are not even a party.
Whenever there is a legal proceeding that might impact an owner’s real property rights, even if that proceeding is something other than a typical civil lawsuit in which real property rights are adjudicated, the owner should make use of any opportunity to present their position and protect their rights. Owners cannot assume that their real property rights will not be impacted simply because they are not a party to the case.