Legal Question in Real Estate Law in California

Re: Real Estate Loans

Your question is completely unclear; did the father grant deed 100% of his interest to the first son? If so, there was nothing left to grant to the second son. However, if the father only gave 50% interest to first son, then he could then give another 50% to the second son. Any existing loans on the property at the time of the grant to either son will still need to be paid and the sons take whatever interest they get subject to any existing loans of record. Note: unless the sons' deeds are RECORDED, there is no protection to either son for anything. But, if one son has a recorded interest in the house, then the other son cannot get a loan encumbering the interest of the other--at least not legally.

Re: Real Estate Loans

I assume each successive grant was of a 50% interest and that the two sons are now tenants in common.

If the grants are properly recorded, the public record is "notice to the world" of the way title is held, and a lender to one cannot acquire a security interest in the half interest of the other. Indeed, most professional or institutional lenders would not make a loan secured by a half-interest in a residence, because it is poor quality collateral. In order to cash in, a lender would have to foreclose and then do a partition, or accept whatever it could get for a shared interest, probably next to nothing.

On the other hand, if the ownership facts are not properly reflected in the public record, a lender might be held to be a "bona fide encumbrancer for value, without notice" that the borrowing son is only a 1/2 owner. In that case, the lien could attach to the entire property.

Of course, if Son X sustains any losses due to the over-borrowing shenanigans of Son Y, Son X would be able to sue Son Y and get a judgment for his losses.

This business about protecting bona fide purchasers and encumbrancers is probably part of the law in order to encourage recording of interests in real property.