Real Estate Law and Probate, with Jennifer Felten

0:02 So, as a probate real estate agent, focused in probate real estate, it inevitably crosses paths with real estate law and other attorneys unrelated to actual probate specifics. There's a lot of carryover. one of my favorite guests we had on last year and haven't had on for a while, Jennifer Felten is the principal owner and attorney for RELAW APC. She's a wealth of knowledge of all sorts of real estate. I think I watched our episode from last time. I was just I said, "I love this episode." And I started rethinking those prepared for today. and then I thought, "Jennifer must just be a complete fountain of information." I went to her website and saw her speaking schedule and I'm so exhausted I had to lay down and take a rest. Jennifer, thank you for joining us today. Thank you, Bill, for having me. I'm a pretty busy guy, Jennifer. I'm not that busy.

0:50 [laughter] It's It's all calendaring. I actually have a class on that. [laughter] okay. So, I think we're having a I think I need to take I'm I am pretty good on calendaring, but I think I need to take your class cuz I don't know what you have You have a whole firm that you run and then you have speaking engagements like only about eight a day, I think, and then you imagine that you talk to clients as well and team members. So, we can talk about managing time along the way, but let's talk about again the main I think opportunity that you bring to us is the real estate transaction perspectives of an attorney that we need to deal with in probate. There's some issues that that come over more clearly. So, for example, I know if I ask an attorney, "What's the most common area of problems in this transaction or areas that are solvable?" They almost always say it's about disclosures. And that challenge is even more so in probate where very often the person who's the seller, the estate, the administrator, executor, maybe has never been to the house or has limited access to the house and doesn't know as much and thinks as a result, "I don't have to disclose anything." That's a big mistake, isn't it? It's a huge mistake. So, the disclosure obligations for a successor and heir are lower than it would be if you lived in the property and were the seller, right?

2:07 And that is actually statutory in California that they have a lower obligation. But it doesn't stop the baseline rule that you have to disclose anything that you know that might be material to the buyer. Right? So, the materiality rule, which is very favorable to the buyer cuz like I said, it's not what I think as the seller or the heir is important. What does that buyer, who I don't know,

2:35 [laughter] think is important relative to the property? The materiality disclosure obligations are not wiped away by the limitations with estates. so, I've had all kinds of issues with estates not properly disclosing and it creating litigation after the fact. So, as a listing agent in probate, I've often thought that whatever I can document that the seller has access to, we should disclose. So, for example, in my MLS, we have the ability to post documents and I can point to them and say, "Hey, you posted are the following items you should check. Death certificate, which we'll have on there, the location of death often if they were if they're pronounced at the property, that will at least be documented. If we do inspections, to provide copies of those." Would you recommend an estate to do an inspection to save a record of what the status of the property is and then share that with prospective buyers or is that disclosing too much information, do you think? I think it's a You're going to You're going to laugh. This is an attorney answer. It's an It depends.

3:43 [laughter] Right? And it depends on if you're going to need to go in and do something, make changes, all that kind of stuff. If you are, then getting an inspection makes sense. If you're not going to touch the property at all, going and getting an inspection could get you a whole bunch of issues you now have to deal with that you wouldn't have to otherwise. Right? So, depending upon what you're going to do will determine whether it makes sense to get an inspection. One of the other common areas of problems in real estate in California, particularly Los Angeles now, are squatters or the various shades of people living in a property that the seller doesn't want to have in the property, right? In probate, you have additionally, like an individual beneficiary who feels they're entitled to stay there. You have the former caregiver who feels they have the right to stay there. and it's increasingly difficult to evict, particularly from single-family homes in Los Angeles, Los Angeles County, and now the state of California. I know we talked about this a year and a half ago, but I believe the law has changed to where virtually anybody has rights of eviction for you know, for just cause only or there's no cause eviction, for example, for single-family homes or at least very limited. Can you talk a little bit about the changes and how you advise clients in those situations? Yeah, getting people out of property is a very big challenge in California, no matter what.

5:10 And you really need to look at how they got in on how we try to get them out because, you know, a family member who's been living with mom, for example, right? Probably doesn't even have a lease, right? There's probably no contract or any documentation relative to their habitation. So, we're going to have to start administering the estate. The estate administration is going to have to make a determination to sell and then we're going to have a process of getting that family member who's been living there rent-free out without a lease to even go off of. So, you're looking at if they fight, months of fighting and drama to try and get them out through the unlawful detainer process. It's It's not criminal. One thing that I explain to clients as well as attorneys is that that person has been living for free for three, four, five years. It's almost like they're a feral animal in that they're des- They know they can't afford to make it on their own in the current configuration, right? That's not to say people can't improve and change. But from where they're operating now, usually induced with drugs or alcohol or whatever psychological issues, they can't afford to move somewhere and pay for market rent anywhere. And so, really, they're like fighting for their lives. I mean, that's their That's their emotional where they come from. Now, whether right or wrong, we could argue, for sure, but that's where they come from.

6:34 And so, I try to explain to the customer, "It's cheaper for the for that person to fight legally than it is to pay rent anywhere else in the world. So, they're going to fight tooth and nail to stay there and be prepared for that." Now, you mentioned months, but it seems to me there are cases where I have I have cases where it's been years where they create a fake deed, they create a fake will, they create a fake trust. they have legal help through various channels. So, talk about what are some of the effective strategies or what are some of the effective tactics to enhance an estate's you know, hand of cards to get a better outcome? Yeah, I mean, the biggest thing is, you know, hopefully if we can get some ability to sell the property and we can get some cash, then there's money to get the person out, right? Because negotiation is by far your best way to deal with a problem family member, right? Some sort of buyout and cooperative agreement to get them out versus months in just even a traditional, you know, eviction process. Or again, if they're challenging a probate, they're challenging a will, they're, you know, creating fake documents, now we're talking about a whole new world and additional litigation and costs and drama. And where a lot of the challenges is, you know, mom has been, you know, supporting the deadbeat brother of the, you know, the other siblings who are so already annoyed with him or her,

8:02 [laughter] right? That cooperation and making a deal sounds awful. And I often It's like, "It's a day that someone wants to fight over something on principle. And I'm like, "Well, is principle worth $100,000 because

8:18 [laughter] that's what we're talking about, right?" That's the price tag for a principle. Correct. So, between and two or three years, right? So, is principle worth that or is making a deal, you know, holding your nose

8:35 [laughter] and making a deal a better option? And so, that's a lot of times the conversation we're having in order to try and make, you know, make it work instead of make it fight. One of my coaches said early on in my career, "You can be right or you can be rich, but you can't be both." And I think there are people who really want to It's not even the money, it's also the incredible emotional torture of that litigation can be for the non- experienced litigant, right? It's just It's just something that they don't understand how they're going to watch somebody stand up on the stand and lie or under in a deposition lie. Like, "How could they lie?" Well, you know, there's $100,000 involved. People will say anything for that kind of money. Oh, yeah. Don't assume people are going to tell the truth. Don't Don't think that you can logically resolve an issue, right? You can control you and your worldview. You're not going to be able to solve the rest of it. If you think you're you know, they're going to agree with you or think you're right, you're you're wasting your time and energy, right?

9:40 [clears throat] one of the most recent changes since we last spoke was regarding commissions. Now, obviously as a real estate agent, that's critical to us because literally the process by which you got paid changed. The paperwork changed. The discussions all have to change in order to be effective. And yet to me it seems like this change has gone through where agents kind of figure out what to do, how to handle it. I've not seen conflicts. I might have thought there would be people saying, "Hey, I don't need to get to pay you or I would thought would have thought that it might have created more conflict." But it seemed like the opposite that having discussions has way solved the issue. Have you seen in your practice claims regarding commissions or is it something that's just not been on the radar? I think it is it is a there's pluses and minuses to what happened, right? So prior to the lawsuit that changed how commissions are being paid, the real estate commissions were all negotiated with the seller with the with the expectation that the seller was going to pay for their agent and the agent who brought the buyer, right? And now that is that is not contractually what is happening, right? The seller is only contractually agreeing to pay their own agent with the buyer contractually agreeing to pay their agent which didn't used to happen.

11:03 However, in the vast majority of cases the sellers are still agreeing to pay the compensation owed to the agent for the buyer. So the ultimate result hasn't changed in 90% of the cases, right? The seller is still paying all of the commissions, which is why you don't see the like the how we are getting there is different, but we're getting to the same place. And it seems like as an industry we did a pretty good job of figuring out how to do that efficiently. Yeah, I we didn't have a choice, right? I mean I have my real estate license too. I don't sell property, but I get I understand it from a an agent perspective as much as I understand it from an attorney perspective. as an agent for if I'm representing buyers, I just have to learn how to articulate my value, right? Which is something we didn't used to have to do as an agent on the buyer's side. You know, we were able to say, "I will help you and you're going to get and the seller is going to pay for my effort." Now I have to have the conversation of "Look, I'm going to put in all this effort, you're going to agree to pay me, but we're going to try to get the seller to pay and most of the time they will, right?" that's it's just a different conversation with a different level of expectation and if as long as you appreciate and can articulate your value, most buyers get it and you know, are going to be on board and most sellers want to get their house sold. You know, and you know, the market has shifted since the commission thing happened as well, right? The commission lawsuit happened at a time where we were in multiple offers and you know, we were getting 20 offers on a property and the seller had a lot of power.

12:43 We're not in that market today, right? So the sellers are willing to pay if we end up back in that market, we may be having different conversations, right? Where the sellers are saying, "No, I'm not going to pay for the agent who represents the buyer." But we're not there right now. Yeah, I agree that we're not we're not there and kind of the opposite. I think that you know, if the market changes, you know, the buyer's agents who get the contracts will be proving their value by getting the contract or not getting their value paid by not getting the contract. So I think you're I think you're absolutely right. The market's going to determine that, but today I'm only really on the listing side most of the time, but I do see the buyer's agents much more deliberate and thoughtful and paper covered and I really had a I did a transaction just today where my you know, client said, "Well, looks like we're pay and on the buyer's side looks like we're paying on top of the sales price." I said, "No, it was in the purchase contract. They agreed to pay that and then in our buyer agreement it says the seller pays and you don't pay, so that's all kind of covered and the seller agreed to pay less, then I agreed to eat it. So it's just all those kind of things. It's all kind of handled." Okay, so I wanted to also talk about resolving conflicts. You know, one of the things I find is that the earlier I can help resolve a conflict as a real estate agent I mean I've never been I've never been in a lawsuit. I've never been I as a broker representing one of my agents I have, but as a agent I've done hundreds of transac thousands of transactions, I've never been sued or had to go into a court over the real estate transaction not being done right.

14:26 And part of this I find it's really important to cover these things early before they escalate and people kind of get their positions drawn. Yeah. One of the things we talked about last time was mediation arbitration. Now these are clauses in our contracts and by default they get signed when we do electronic signature. And if you don't do that it kind of gets highlighted, "Hey, you're you're taking off this contract. Why are you taking it off?" Talk about how that really you know, does that protect the buyer, the seller, both? Does it protect the agent, not the client or both? How do you How do you see those contracts not representing a client in this case, you're just an attorney looking at the industry. How do you see those two clauses serving who's it serving and is effective? Right. So the California Association of Realtor contracts, which are the ones we do with on you know, 90% of residential property in California are designed to encourage alternative dispute resolution. There's no question that that is the policy position of the trade association that we want this stuff out of the court and being resolved without trial. that's a business decision that they've made versus you know, us litigating everything. And it's a fine business decision. It's just that. It's a business decision. and so the contracts do two different types of things to try and avoid litigation. Part one is mediation, right? So the CAR contracts mandate that you mediate. If you don't mediate, you are not able to go after your attorney's fees if you prepare prevail later on in the case.

15:59 And attorney's fees are a big deal when we're fighting over something. We want our attorney's fees. So the contracts really make it favorable to try and mediate a dispute. If you can get the parties to mediate, they probably settle about half the time. So you're avoiding a ton of attorney's fees, you're avoiding a ton of time, you're avoiding a ton of drama and people ultimately agreeing to resolve a dispute. That's step one. Step two, which is the more optional part and where the initials are is arbitration, right? So the CAR contracts have a place, but you do have to agree to arbitrate, right? Then that's that's both federal and state law. It is presumed and 95% of people check or sign or initial the arbitration, but it's not mandatory, right? And if I were signing a CAR purchase agreement, I personally would not agree to arbitrate. Interesting. Interesting. Okay, so let's let's highlight that. If you were personally signing a buyer seller your own property on a purchase contract, by default cuz every case is different I'm sure, by default you would not sign the arbitration. Okay, so and why is that? And the reason is is that I have arbitrated,

17:10 [laughter] you know? And the reality is that the way arbitration works is that it is done by a non-judge, right? We have a someone who's probably been a judge or an attorney making a decision who does not have to follow the law. The rules don't say the arbitrator has to follow the law. And I cannot go after the arbitrator for not following the law. They are they have very broad discretion to decide that if I agree to binding arbitration, which is what the CAR contract calls for and they don't follow the law, I'm stuck. I unless they committed some sort of real egregious, you know, double dealing, self-interest, right? fraud, you know, something like that, that arbitration award's going to stand. The no judge cuz you can you can try to appeal it because our litigation system allows you to fight forever, but the law doesn't allow you to appeal on the facts. You have to find some other reason to appeal. So I as someone who I want to be able to analyze my case and see whether I'm going to win or not. I analyze it on the law, not on the bias of some arbitrator I may or may not know. The reality is that the vast majority of arbitrators are good people who get it right most of the time, but that that discretion that they have is not something I like

18:36 [laughter] and I'm not personally comfortable with. The idea that arbitration is quicker and cheaper and easier is is fundamentally baseline probably true, but not significantly. It is still extremely expensive to arbitrate. You're still doing all of the discovery and all of the things you would do in a traditional case. And though it's quicker, it's still a long process. 6 months, a year to get through an arbitration is not uncommon. So the arguments for it have many detriments that in my personal life I would I happen to be a lawyer. I can afford to fight if

19:15 [laughter] want to, but I don't like the discretion that arbitrators have and so it's not my first choice. Interesting. Now mediation both parties have a decision to make. It's not determined what they have to do. My experience mediator is they may say to you know, one side or the other or both, "Here's what you're faced with. Here's the odds of you winning. It may not be what you think it is. Here's what it's going to cost you. Here's why I think you're going to win or lose, whatever." But they still have to either agree or disagree and move forward. Arbitration, are they at that point locked in unless there's some sort of grievous error? Are you at that point are you Have you now foregone the opportunity to litigate and this resolve? Is that Is that why you're against it? Correct. So, a mediation is just about that. It's about compromise, right? We're going to a neutral third party who's going to is is going to give us some reasons to try and make a make an ideal, right? They're going to analyze the case, they're going to warn us of all of our risks, and they're going to try to get both sides to compromise. That's mediation. Arbitration is a trial. It is a trial. with an arbitrator who's going to decide like a judge. It's Solomon and the baby, right?

20:33 That it and so you are bound by the decision of the arbitrator, and I would rather be in the court I personally would rather be in the court system where if the judge gets it wrong, I have way more options to fight than an arbitration. Fascinating. That's what I was saying and I mean you may have said that the last time I think I missed that, but now that I hear that more clearly, mediation in my experience is it always ends with neither party agreeing to settle, but half the time they settle like 30 days later. And there's two parts. One everything kind of sinks in and then the second part is, okay, well if you don't agree to settle or whatever the mediator's recommended, we're going to move forward. Now you need to write check for 50 or 100,000 dollars. Whoa. Let me rethink what the mediator one more time because the money's real at that point. I think it's it you know, I would say probably 25% of mediations settle at the mediation itself, right? That we can get there. and I think about half of cases settle as a result of mediation. So, yes, that like next morning you wake up and you're like it's not resolved and this is going to cost me how much to go where to do what, right? Like all right, yeah, and I know where I'm at, then we start to have those conversations and sometimes wrap it up and put a deal together. you know, and sometimes you know, the alternative is just not great. I mean, if we're fighting over 10,000 dollars, you know, that just makes no sense to arbitrate, right? So, it if you didn't resolve it at mediation, you're probably walking away if you're if you're the buyer, right? If you're missing your money, you know, if it's a 100,000 dollar dispute, we're having a different conversation, right? But it really is going to depend on the case. It's going to depend on whether both sides were properly, validly, honestly involved in the mediation, right? It's There's so many factors. I think sometimes people have attorneys, sometimes they don't.

22:35 Sometimes having an attorney is a good thing, sometimes it's not. [laughter] You know, a good attorney taking a client to mediation is going to be there with the intent of settling, right? I have been to mediations where the other side had no intent of settling and was not being realistic about the risks of their case. Well, that's just a waste of time, right? Then you've wasted everybody's time if you're not trying to properly resolve the case. Well, I can say unreasonable people don't suddenly become reasonable because their counter says they do a mediation. Yes.

23:14 It's it's just you know, people I think it goes to the reasonable attorney as much as the reasonable client, right? But yeah, but the unreasonable attorney I mean I'm sorry, the unreasonable client wants to hire an unreasonable attorney. That's that's they're not stupid. They know what they want. [laughter] It happens to the client.

23:33 It happens There's a saying in the military There's a saying in the military that the enemy gets a vote, too, right? And so the unreasonable person gets to hire an unreasonable attorney. That's just to me, I notice that pairing all the time. Is that just me or is that I it's definitely it definitely is more common than not, but unfortunately, where I see the biggest challenge, so real estate is a very unique area of law. Like each area of law has its own things, right? But real estate as someone who's been in this industry, there are there are patterns and there are things. Like if someone comes to me with a dispute, I can pretty much tell you where it's going to settle at if it settles, right? From day one. Because I understand the risks, I've seen the cases, I kind of know how it goes. But what happens is attorneys who are not experienced in real estate will sometimes get involved in these cases, and so they don't have a good benchmark of where a case should settle at. So, they're you know, where what I see is personal injury attorneys, right? Who are used to getting big paychecks come into a real estate case and think, you know, just cuz I showed up, I'm going to get a 100,000 dollar paycheck, and that's not going to happen in a baseline real estate dispute. There's not insurance and there you know, those cases just don't settle there. So, if I have an attorney who's just, you know, off the reservation as far as doesn't appreciate where their case is, we've wasted our time at that mediation, right? And often they're on contingency.

25:05 So, they want that number as high as they can get it because they didn't properly evaluate their case cuz they don't know the area well enough. And then they're stuck with it, right? They put a lot of time and effort and they're sunk in cost. They're now trying to get repaid for all the work they did and maybe expenses they advanced. And the money's not in the case. The money's not there and then it just kind of seems to linger in these situations. Like I get

25:28 Linger. It costs a lot of money to go to the next level that they don't want to spend because now they know [laughter] Right. where their case is, right? But it's it's a challenge. Yeah, it brings me to something when we met last time, you know, you were very gracious to offer, you know, people to call an attorney and con- consult. I always feel bad when I just pass somebody on who's not clear on what they're looking for. I try to get them to at least identify, what are you trying to get done? Because they'll say, well, I need an attorney. I need a real estate attorney. What do I need a real estate attorney for? Well, it has nothing to do with real estate, it has to do with maybe evictions or has to do with probate or has to do with some other some other detail. or I need a you know, a litigator you know, versus an attorney who can give advice. You're already in a dispute of some sort, so you there you need to get somebody to defend yourself. So, you know, what we do, you know, I obviously you're a large firm. You have I'm sure an intake process. You're nice enough to offer free consults, but what are some things that that help you when a when a referral comes to you so that it's teed up? You get, you know, real estate agents sending you documents and emails and explaining the details or do you just want to do your own intake on your own? How do you prefer to take in a prospective conflict that turns into business or not? Right. So, for us that we want to talk to the consumer, right? I mean, ultimately that's who's going to be hiring us and really understanding what they want and whether we're going to be able to get them what they want or not is what it is a lot of our intake process. So, you know, we Yeah, if you have some papers, they're always helpful, right?

27:02 But the ultimate what is the goal of the client as far as what would what would make them happy relative to the issue they're having? so, we're going to ask those questions at intake, right? So, you know, someone's on title to my property that shouldn't be on title to my property. So, in a perfect world, what would you want? And how are we going to get there? And why are they making a claim against your property, right? Like those are the questions. So, for us, an intake on a dispute is always going to have a consult, right? We are going to have to talk to the person, understand what their goal is, why are they in the position they are, and then it what they want is it something we believe we're going to be able to get them or not. sometimes something's broken, but I can't fix it.

27:50 [laughter] You know, so if I can't fix it, I'm not going to you know, I'm not going to take their money when I know I can't fix it. sometimes they just need a different attorney who works in that space, right? So, for us, you know, sending them our way, we love to talk to people. We're we're blessed in that we do have an intake, we do have a team. we work in multiple different practice areas. So, we love getting referrals. If we can help them and if we can if we can give them value, we will take them on. If we can't, we'll we'll give them some options and tools to try and resolve their problem. So, just to help me understand cuz I always feel bad when I send a you know, a client and then the attorney calls you back and says, well, but thanks for referring me, but this person was you know, whatever the story was. So, like way off base. And I go, I'm I feel bad. I don't want to waste your time. But I didn't really dig into it versus I dig into it maybe too much and chase them away. So, again, if I send you somebody who for whatever reason it's you're not able to help them, at the end of the day that's that's the binary to the yes or no, you can help them or you can't. If you can't, we'll still be friends and maybe you'll let me know that you talked to them and it's time to find some other solution for them. Right. And it's okay if we're not the right answer, right? That that we're not going to be the right answer for everybody. And again, some things we can't fix, but it's okay. That's our role is to do that evaluation, see if we can be of service, and if so, you know, then it's an opportunity for us. If not, it's it may be an opportunity for someone else, or you know, they may need to reconsider what they want.

29:26 So, that said, anybody watching this, if you're real estate agent and you have a client who has some issues, feel free to pass them on. if they're related to real estate law issues in California, feel free to pass them on to Jennifer Felten. And I'll just bring up her fast contact info. The website is r e for real estate law apc.com, relawapc.com. And her contact information's is down below. The firm phone number [phone number shown on screen] and you heard it from her, as busy she is, if you have a challenge in a real estate area for real estate agent or attorney dealing with other practice areas or maybe a petitioner or administrator of a probate who has some real estate issues, Jennifer Felten is just a wealth of knowledge and again, like I said, I saw her schedule and I almost passed out. Jennifer, again, thank you so much for educating us today. Thank you for sharing your time today. Thank you for being available. Going forward, I appreciate your time today. Thanks, Bill. Glad to have you. Glad to be on and that you had me and we do. We're we're glad to talk to anybody who has questions and see if we can help. Fantastic. We'll talk soon. Thank you so much. And for the rest of you, this is Probate Weekly. We get together every week and talk to primarily probate attorneys and vendors. In this case, obviously related cuz we get involved with regularly evictions and title issues and conflicts and other litigation issues. And so, we need a real estate attorney that can help us with that and Jennifer Felten at RELAW APC is one of the best in the business. A large firm, but she makes she has a very personal touch on that. So, hopefully you learned today from that. If I can help anyway, please reach out at Bill Gross Probate on social media. As always, make today your best day ever. Thank you so much.