Legal Question in Wills and Trusts in California

Real property.

If less than $100k you can do a PC 13150 petition to the probate Court. It's a mini probate. Should cost $2,000 - $3,000 in total between attorney fees and Court costs.

I disagree in part with Mr. Palley. A deed of trust is an instrument used to provide security for an underlying obligation. If there is no underlying obligation, then the deed of trust is nothing more than a cloud on someone's title. "There cannot be a mortgage if there is no debt or other obligation to be secured." (Coon v. Shry (1930) 209 Cal. 612.)

To the owner of real property, a deed of trust that they executed is an encumbrance on their property. But that does not turn the deed of trust into real property. The trustor has merely conveyed the power of sale and the power to reconvey to a trustee, to hold in trust until the trustor (borrower) defaults or pays off the loan. If the decedent was the beneficiary, then the decedent held a beneficial interest in the deed of trust.

The best term for the beneficial interest is that it is an "interest in realty." While the security is an interest in land it does not follow that the interest is realty for all purposes. Thus for some purposes, the courts have held that a note and deed of trust constitutes evidences of debt and fall under the definition of personal property. (Johnson v. National Surety Co. (1931) 118 Cal.App. 227, 229; Bank of America v. Sparr R. Co. (1937) 20 Cal.App.2d 10.)

In Estate of Moore, the Second District Court of Appeal held that a purchase money note and trust deed, not specifically mentioned in the decedent's will, would pass under the devise of "real estate owned by me." ((1955) 135 CAl.App.2d 122.) But the courts have not been in agreement. In Estate of Sayles, the Fourth District Court of Appeal held that the beneficial interest under a deed of trust would not be a sufficient interest to make a real property claim against the estate. (1982) 130 Cal.App.3d 275.)

To answer your second question, you would not use Probate Code section 13100. That section is for the successor of the decedent to collect property that belonged to the decedent, but was in a third party's possession. The deed of trust is not relevant here, but rather who has possession of the promissory note. That is because a transfer of a debt secured by a trust deed is a transfer of the secured obligation because the security follows the debt. (Civ. Code, sect. 1084, 2936.)

To state that more simply, if the decedent had possession of the promissory note, there is no need to serve an affidavit on a third party to transfer the promissory note and deed of trust, because they were already in the possesion of the decedent. But if the note was transferred to a third party, then the beneficial interest in the deed of trust also passed to the third party, by operation of law, and is no longer in the decedent's estate.