With the holidays fast-approaching and, with it, the opportunity for family to get together, we wanted to provide you with a not-so-nice family situation, so that you may better appreciate your own situation. Happy holidays! The recent case of McMillin v. Eare, Case No. B298990, 2021 WL 4949007 (Sept. 30, 2021) is an intriguing matter, involving a family dissolution and an ensuing fight over the family’s real estate. The decision reminds us of two important (legal) lessons and a third (value) lesson: first, you don’t owe a fiduciary duty to your family members, just because they are family (sorry Mom!); second, when you deed a property to another, you have transferred it and longer have any right to it, regardless of any purported conditions of the transfer; and, third, be nice to your family and grateful for your loved ones.
Family Fight Over Real Estate
The recent case of McMillin v. Eare, Case No. B298990, 2021 WL 4949007 (Sept. 30, 2021) is an intriguing matter, involving a family dissolution and an ensuing fight over the family’s real estate. The decision reminds us of two important (legal) lessons and a third (value) lesson: first, you don’t owe a fiduciary duty to your family members, just because they are family (sorry Mom!); second, when you deed a property to another, you have transferred it and longer have any right to it, regardless of any purported conditions of the transfer; and, third, be nice to your family and grateful for your loved ones.
The McMillin case involved a bitter divorce and a convoluted series of transfers between Mom/Mother-in-Law (“Mom”) and her son (“Husband”) and her daughter-in-law (“Wife”). To summarize, the essential fact pattern goes like this—Mom had multiple properties in her name. Everything was going well between Husband and Wife, so Mom thought nothing of transferring her property to the two of them.
At some point thereafter, the marriage deteriorated, and Husband filed for divorce. At that point, Mom no longer wanted Wife to have an interest in the properties. Up to that point, Mom’s grant deeds had not been recorded but remained in the possession of Husband and Wife. After the commencement of the divorce proceedings, Wife had them recorded forthwith!
According to Mom and Husband, they had an orally agreed that the transfers would not be effective unless and until some variation of the following occurred—Mom died, Husband bought another property and/or Husband had secured financing. As Mom was still alive and as Husband never secured financing, they argued that the transfers were never effective, meaning that Mom still owned the properties and Wife got zilch. Thus, they argued that Wife had no right to record the grant deeds and was trying to steal the properties from Mom.
Wife countered, arguing, ‘Wait just a minute! This is just a ploy between Mom and her son to concoct these purported oral agreements in order to defraud me out of my rightful interest in the properties.’ While that may have seemed to be the situation given these seemingly all too convenient conversations, the trial court, nonetheless, found Mom and Husband credible and entered judgment for them. Wife appealed.
As to the first point, i.e., whether a fiduciary duty exists between family members, Mom had argued that Wife owed a fiduciary duty to her to simply hold the grant deeds and not to record them and, because they were family, she trusted her. The appellate court disagreed: “The trial court below found [Wife] ‘owed fiduciary duties to [Mom]” because the “parties were family members and [Mom] reposed trust and confidence in her daughter-in-law.’ The trial court did not cite, and we have not found, any authority to support the notion that one owes fiduciary duties simply by being a trusted in-law or soon-to-be ex-in-law.”
As to the second point, i.e., whether Mom and Husband could have transferred the properties subject to unstated conditions, the appellate court held: “A deed cannot be delivered to the grantee under any condition not expressed in the deed; any delivery to the grantee, or to the grantee’s agent, is absolute and the deed therefore takes effect upon delivery, and any purported condition is ignored. If the grantor executes and delivers a deed to the grantee with the intent of divesting title, but imposes an oral condition on the transfer, the condition is disregarded and the grantee receives title free and clear of the condition.” In a nutshell, if the conditions were in the grant deed, then they would have been enforceable; if outside of the grant deed, whether oral or in writing, they were not.
As such, the trial decision was reversed and we walk away with three important lessons: (1) family members are not fiduciaries (and maybe, cannot always be trusted) and (2) any conditions on a grant deed better be put in the deed itself, otherwise they will be disregarded; and (3) be grateful for your family/loved ones. The real estate attorneys at the Ponist Law Group have decades of real estate experience and handle a wide array of real estate disputes. Please let us know if we may ever be of assistance.