Can I purchase a piece of residential real estate in California using a Straw man?

Asked about 2 years ago - San Lorenzo, CA

I am contemplating purchasing a home that needs to undergo significant renovations before then either reselling it or moving into it (don't know which yet). I am contemplating using another party to take title to the property provided that I am not violating state real estate laws. Can anyone point me to the correct section of the real estate code or civil code that addresses what can and cannot be done when making a purchase in such a manner?

Attorney answers (5)

  1. Michael Raymond Daymude

    Contributor Level 20

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    Answered . I agree with Mr. Doland. Your use of the term "straw man" suggests some sophistication. A straw man is usually used to accomplish something legally through a third party when it cannot be done directly.

    There are many provisions of California law and some might make such a transaction illegal depending on the exact facts. Without knowing a lot more about the transaction, and the reason you wish to have a 3rd party purchase the property for your benefit, it is difficult and improper to attempt to answer your question.

    In a general sense, there is nothing illegal about what you propose. Real estate purchase agreements are frequently written in the form “John Doe or nominee” which allows for title to be taken in a name other than John Doe. However, as Mr. Doland suggests, there is significant risk in taking title to property you “own” in the name of someone else. If you are doing so to avoid a judgment creditor, for example, the risks are no less significant.

    I am licensed in California only and my answers on Avvo assume California law. Answers provided by me are for... more
  2. Chi Leung Ip

    Contributor Level 13

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    Answered . If you don't want exposure to your personal liability. Set up a LLC or corporation as your holding entity. I see too oftern the straw man will take advantage of you and you have no ways to counter. Edward www.lawyer4property.com

    No attorney / client relationship established. The answr is for discussion and general information only. The... more
  3. William Richardson Christian

    Contributor Level 12

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    Answered . Assuming you are not involved in a fraudulent action, the most common mechanism to take title without disclosing your identity is in the name of a trust. You can form a revocable trust under almost any name, but must disclose to the title company the trust instrument, provide a Certification of Trust, and have the trust instrument prepared. You then take title in the name of the "Fictitous Name Trust" (or more acceptable name you select). Note that many title companys prefer that the identity of the trustee be stated in the title , but it is not required. You will have to prove to the title insurer, financer or buyer thatthe trust is, indeed, yours.
    This is a lot of trouble, but a search of the title records will not reveal your name. Unless you have a very compelling reason to do all this, it is not reccomended. This may be done to hide the name of a celebraty, to avoid the abusive spouse or other legitimate reason. It will not protect you from creditors.

  4. John Noah Kitta

    Contributor Level 19

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    Answered . Yes and no depending on your specific facts. You would have to give a very detailed factual summary for an attorney to give you a precise legal opinion. There are quiet a number of practical problems also, i.e. If your name is not on title how are you going to get the property financed to acquire the property?

    This participating Attorney does not warrant any information provided, nor are we creating an Attorney-Client... more
  5. Michael Charles Doland

    Contributor Level 20

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    Answered . The benefit of your proposal is not obvious, but the risks are. I suspect there are facts you are not disclosing, like you being a broker or salesperson buying their property for your own account with disclosure. It is permitted.

    The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may... more

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