Real Estate Litigation 101: Quiet Title Actions and Defaults

Quiet title actions in California are unique in that the California Code of Civil Procedure does not allow a real estate attorney to get a default judgment in a quiet title lawsuit.

What Is A Quiet Title Lawsuit?

Real estate attorneys bring quiet title lawsuits in order to resolve disputes over ownership of all or part of real property, including neighbor boundary disputes. Quiet title lawsuits can also be used to correct errors in a property’s chain of title, even though there may not be a dispute over the ownership of the property.

An Attorney May Not Seek Default Judgment In A Quiet Title Action.

However, many real estate litigation attorneys and even judges are unaware of a requirement of Code of Civil Procedure that the court may not enter a default judgment in a quiet title lawsuit. Instead, the court must hold a hearing to hear testimony regarding the case. Code of Civil Procedure section 764.010 states, in part, that “The court shall examine into and determine the plaintiff’s title against the claims of all the defendants. The court shall not enter judgment by default but shall in all cases require evidence of plaintiff’s title and hear such evidence as may be offered respecting the claims of any of the defendants.”

Because many judges are unaware of this provision, it is incumbent on the real estate attorney to notify the trial court that such a hearing is required.

A Defaulting Defendant May Still Appear For A Default Hearing In A Quiet Title Lawsuit.

Moreover, in a recent California Court of Appeal ruling, the appellate court held that the plain language of the statute allows a defendant to participate in the hearing, even if that defendant has not appeared in the case. In Harbour Vista, LLC v. HSBC Mortgage Services, Inc. (2011 WL 6318525 Cal.App. 4th Dist. 2011), the appellate court held that the trial court did not have the authority to enter a default judgment in a quiet title case and, additionally, that statute obligated the court to hold an evidentiary hearing in open court in which both plaintiff and defendant could participate.

“The Legislature has not left anything to the imagination about whether a trial court can enter a default judgment in a quiet title action. ‘The court shall not enter judgment by default’ is unequivocal,” said the appellate court. “Once a quiet title judgment on any grounds becomes final, it is good against all the world as of the time of the judgment. There is, for all practical purposes, no going back. Given the frequency with which quiet title actions involve real property—which is recognized as unique—it is understandable that the Legislature would want to take every precaution to assure title is adjudicated correctly. These precautions could reasonably include allowing a defendant having some claim to the property to present evidence, even if it has been dilatory in responding beforehand.”

Quiet Title Default Hearings Require A Hearing In Open Court

The appellate court also considered whether the use of the words “hear” or “hearing” require oral argument. Although other cases have found that this is not always the case, the court in this case held that a quiet title judgment requires a hearing in open court.

In the event that the court holds a properly noticed evidentiary hearing and no defendant turns up, then the court renders judgment in accordance with the evidence and the law based on what it has before it.

California real estate attorneys who handle quiet title lawsuits should be careful to educate the trial court about the requirement of having a hearing in open court with witnesses in order to establish quiet title over real property. If these rules are not followed, the default judgment easily gained is then easily lost.

Los Angeles real estate attorney Laine T. Wagenseller specializes in real estate litigation in Southern California, including quiet title lawsuits. To read more articles on real estate and business litigation, visit www.wagensellerlaw.com. To contact Mr. Wagenseller, call (213) 286-0371 or email to ltw@wagensellerlaw.com.