Legal Question in Real Estate Law in California

Re: Quitclaim deed to non-existent entity

Before you ask yourself if it's legal. You ask yourself if it's dumb. The answer is it's dumb. And the deed would probably be non effective if it is ever challenged. When you form a corporation you have to give it a name. What do you do if the name you put on the deed isn't available. Travel from state to state until you find one that has the name you chose available. You can reserve a name if it's available for $10.00. But it does expire after a couple of months. Then there's the possibility that you will not be around to form the corporation, and someone else uses the name. So the property goes off to an individual or entity you didn't want it to. And for whatever reason you want to deed property to a corporation the odds are that a Living Trust is a better way to go. And you don't have to worry about reserving the name.

Re: Quitclaim deed to non-existent entity

Not really; actually,to be more accurate, it is ineffective to constitute a legal transfer if there is no actual entity who is the transferee. Also, if the purpose is to defraud a creditor or to do something improper, it could be a violation of the penal code.

Re: Quitclaim deed to non-existent entity

As the prior answers have pointed out, the mere execution of such a deed is not illegal, merely ineffective. It's what happens next that may get you into difficulty, e.g. an attempt to concoct a sham transfer to defraud a creditor.

If there is no fraudulent intent, but perhaps only a mistaken belief that the corporation exists, or a good-faith and non-fraudulent intent that the corporation have the land upon its formation, the issue becomes whether the deed has been recorded and/or delivered. If neither recorded or delivered, the deed it probably a nullity and can be torn up by the grantor with no legal consequences whatsoever.

If a deed containing an error -- such as one mistakenly made to a then-nonexistent grantee -- is recorded, delivered or otherwise published, it is likely to create a cloud on title that can be rectified by court action.

If a deed to a non-existent corporation is recorded, and a corporation by that name is subsequently formed, the deed will probably be come effective upon the corporation's formation and its acceptance of delivery of the deed.

The basic rules are that fraudulent deeds are void, deeds with errors require court action to correct, and deeds to un-formed corporations, minors, etc. may become effective upon the grantee acquiring capacity and accepting delivery of the deed.