Unperformed Contracts For Sale Of Real Property - Marketable Record Title - CA Civil Law

Section § 886.010

This law defines what a 'contract for sale of real property' means and sets some conditions. It explains that it’s an agreement where one person promises to transfer property ownership to another person after certain conditions are met, and this has to happen within a year from when the contract starts. The law also says that a 'recorded contract' can either be the full contract or a shorter version that is officially recorded.

As used in this chapter:

(a) “Contract for sale of real property” means an agreement wherein one party agrees to convey title to real property to another party upon the satisfaction of specified conditions set forth in the contract and which requires conveyance of title within one year from the date of formation of the contract, whether designated in the agreement a “contract for sale of real property,” “land sale contract,” “deposit receipt,” “agreement for sale,” “agreement to convey,” or otherwise.

(b) “Recorded contract for sale of real property” includes the entire terms of a contract for sale of real property that is recorded in its entirety or is evidenced by a recorded memorandum or short form of the contract.

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(Added by Stats. 1982, Ch. 1268, Sec. 1.)

Section § 886.020

This law says that if you are supposed to get the ownership of a property but don’t meet the conditions outlined in the sales contract, you have to release your claim to the property if the seller asks you to. If you purposely refuse without a good reason, you might face financial penalties, including covering the seller's legal fees if they have to go to court to sort out the title. However, the release or the request for it isn't a necessary step before taking legal action to clarify who owns the property.

If the party to whom title to real property is to be conveyed pursuant to a recorded contract for the sale of real property fails to satisfy the specified conditions set forth in the contract and does not seek performance of the contract or restitution of amounts paid under the contract, the party shall, upon demand therefor made after the operative date of this chapter, execute a release of the contract, duly acknowledged for record, to the party who agreed to convey title. Willful violation of this section by the party to whom title is to be conveyed without good cause makes the party liable for the damages the party who agreed to convey title sustains by reason of the violation, including but not limited to court costs and reasonable attorney’s fees in an action to clear title to the real property. Nothing in this section makes a release or a demand therefor a condition precedent to an action to clear title to the real property.

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(Added by Stats. 1982, Ch. 1268, Sec. 1.)

Section § 886.030

This law explains when a recorded contract for the sale of real estate in California stops being recognized in official records. It will typically expire five years after the date the property title is supposed to be transferred, or if the contract doesn't specify a transfer date, five years after the last condition in the contract should be met. If the contract is legally extended before the five years are up, it will instead expire five years after the new transfer or condition date specified in the extension. However, the expiration timeline can only be changed if officially recorded before it runs out.

(a) Except as otherwise provided in this section, a recorded contract for sale of real property expires of record at the later of the following times:

(1) Five years after the date for conveyance of title provided in the contract or, if no date for conveyance of title is provided in the contract, five years after the last date provided in the contract for satisfaction of the specified conditions set forth in the contract.

(2) If there is a recorded extension of the contract within the time prescribed in paragraph (1), five years after the date for conveyance of title provided in the extension or, if no date for conveyance of title is provided in the extension, five years after the last date provided in the extension for satisfaction of the specified conditions set forth in the contract.

(b) The time prescribed in this section may be waived or extended only by an instrument that is recorded before expiration of the prescribed times.

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(Added by Stats. 1982, Ch. 1268, Sec. 1.)

Section § 886.040

Once a real estate sale contract recorded under this law expires, it no longer affects the title of the property for anyone who wasn't part of the contract. This means it won't create issues or doubts about ownership for others.

Upon the expiration of record of a recorded contract for sale of real property pursuant to this chapter, the contract has no effect, and does not constitute an encumbrance or cloud, on the title to the real property as against a person other than a party to the contract.

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(Added by Stats. 1982, Ch. 1268, Sec. 1.)

Section § 886.050

This law section explains that new rules apply to all contracts for the sale of real estate that are recorded, regardless of when they were recorded. However, a contract won't automatically expire in public records until at least two years have passed from when the new rules started.

(a) Except as otherwise provided in this section, this chapter applies on the operative date to all recorded contracts for sale of real property, whether recorded before, on, or after the operative date.

(b) This chapter shall not cause a recorded contract for sale of real property to expire of record before the passage of two years after the operative date of this chapter.

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(Added by Stats. 1982, Ch. 1268, Sec. 1.)