PR 07215.006 California
A. PR 00-038 Purchase of Property by Representative Payees on Behalf of Minors
DATE: June 16, 1999
In Region IX (San Francisco), the States of California, Arizona, Hawaii and Nevada, and the Pacific Trust Territories: American Samoa, Guam, and the Northern Mariana Islands, have no general preclusion against minors holding title to real or personal property.
You have requested a legal opinion, on a state-by-state basis, addressing specific issues related to the purchase of property by representative payees on behalf of minors. The following opinion, preceded by a summary in the format of the opinion request, addresses the issues presented in the November 2, 1998 memorandum from the Associate Commissioner, Office of Program Benefits, appended to your memorandum of December 2, 1998.
The questions include whether a state permits a minor to hold title to real property or personal property, such as an automobile; if so, whether there are restrictions as to the age of the minor or the types of property that can be held; whether there are specific requirements regarding how property should or must be titled to show the minor as the titleholder; and, if a state does not permit a minor to hold title, or does not permit property to be titled or registered in the name of a minor, what is the preferred method of titling the property to reflect or protect the minor's interest in the property and satisfy SSA's regulatory requirements?
Generally and historically, the right of minors to hold real and personal property has been recognized and upheld by the U.S. Supreme Court, see Oyama v. California, 332 U.S. 633, 68 S.Ct. 269 (1948), and that decision is still good law. The case law and statutes of the states in Region IX have recognized this right, primarily by implication. The general conclusion of this opinion is that minors generally can hold title, with some exceptions, but that other legal and practical concerns make it highly advisable for the property of minors to be held by trustees or other proper representatives. Specific issues with respect to how title can be held are discussed below. Since California has the most comprehensive body of law in this area, and often serves as a model for the less populous states in the Region, it is discussed first.
SUMMARY OF OPINION
Q: Does the State permit a minor to hold title to real property or personal property such as an automobile?
A: California has no general preclusion against minors holding title to real or personal property. As discussed in the attached opinion, its statutory and case law are, at least by implication, essentially consistent with the right of minors to hold real and personal property, as recognized by the U.S. Supreme Court in Oyama v. California, 332 U.S. 633, 68 S.Ct. 269 (1948). Specific limitations apply, however, with respect to ownership of a motor vehicle, as discussed below.
Q: If, so, are there any restrictions as to the age of the minor or the types of property that can be held?
A: California Vehicle Code § 15500 states: "It is unlawful for any minor who does not possess a valid driver's license issued under this code to order, purchase or lease, attempt to purchase or lease, contract to purchase or lease, accept or otherwise obtain, any vehicle of a type subject to registration." This would include automobiles, motorcycles, motor homes and other vehicles subject to registration. A minor must be at least 16 years of age to obtain a valid California driver's license.
Q: Are there any specific requirements on how the property should/must be titled to show the minor as the titleholder?
A: There is no specific requirement as to the form of title. The State has adopted the Uniform Transfers to Minors Act (UTMA), which sets forth language to be used where custodians are taking title to property which is transferred to minors; generally, language to the effect that property is being held by a named custodian on behalf of a minor, identified as such, under UTMA is acceptable for that purpose. See Cal. Prob. Code § 3903. It must be recognized that, since there generally is no actual transfer or gift to a minor when property is acquired by a representative payee, trustee or other representative on behalf of a minor, using benefits paid on behalf of the minor under the Social Security Act, the UTMA statutory language is not mandatory and might be inappropriate for titling such property in any State. For the reasons discussed in the attached opinion, however, including contractual restrictions, it is advisable, but not required, that title to property of a minor be held in some form other than solely in the name of the minor.
Q: If a State does not permit a minor to hold title to property, or does not permit the property to be titled/registered in the minor's name, what is the preferred method(s) of titling the property to reflect or protect the minor's interest in the property and satisfy SSA's regulatory requirements?
A: As noted above, although property generally can be held in the name of a minor, the preferred method of titling the property is in the name of a trustee or other proper representative on behalf of the minor. A trustee holding title to property on behalf of a minor, under a valid trust agreement, would generally allow SSA to be assured that the interests of the minor are protected.
California: In California, the age of majority1/ is 18, Cal. Fam. Code § 6502(a) (2), and there is no general preclusion against a minor holding title to real or personal property. As discussed below, however, restrictions may apply with respect to certain types of property, and other concerns make it beneficial to the interests of minors that proper custodians hold any significant property on their behalf.
As early as 1864, the California Supreme Court recognized the right of a minor, or infant, to take possession of vacant lands and to hold them in his own right in the same manner as an adult. Lackman v. Wood, 25 Cal. 187 (1864). In Donner v. Palmer, 31 Cal. 500 (1867), that same court again upheld the right of minors to hold property, noting that under prior (Mexican) law, a minor could take and hold title by grant. The Donner case subsequently was cited by the U.S. Supreme Court in Palmer v. Low, 98 U.S. 1, 25 L.Ed. 60 (1878), an unsuccessful ejectment action against the successors of the minor. The Supreme Court stated that, under California law, [w]hile infants cannot make grants, they may accept them. 98 U.S. at 16. This was again confirmed in Oyama v. California, cited above. There, the Supreme Court noted that, by federal statute2/ and the Fourteenth Amendment to the U.S. Constitution, the states must accord to all citizens the right to take and hold real property, and it stated: California, of course, recognizes both this right and the fact that infancy does not incapacitate a minor from holding realty. 322 U.S. at 640.
The Oyama Court cited two earlier California Supreme Court cases that also had upheld the right of minors to hold title to real property, Estate of Yano (1922) 188 Cal. 645, 649, 206 P. 995, 998 (as American citizen, minor was entitled to acquire and hold real and personal property, and infancy did not incapacitate her from becoming seized of the title to real estate (citations omitted)), and People v. Fugita (1932) 215 Cal. 166, 169, 8 P.2d 1011, 1012 (It is... conceded that minority is no handicap to the present ownership of the property, even though the minors be of tender years. It is undisputed also that recordation of the deed is sufficient delivery thereof and acceptance of title on the part of said minors.). In the case of In Re Scott K. (1979) 24 Cal. 3d 395, 405, 595 P.2d 105, 111, 155 Cal.Rptr. 671, 677, the California Supreme Court continued to rely upon Estate of Yano, in stating that juveniles are entitled to acquire and hold property, real and personal; it further stated that the property of a minor is his or her own, not the parents'.
California Family Code § 7502, which is the otherwise unchanged codification of former California Civil Code § 202, which the In Re Scott K. court specifically cited and relied upon, states: The parent, as such, has no control over the property of the child. Cal. Civ. Code § 671 provides: Any person, whether citizen or alien, may take, hold and dispose of property, real or personal, within this State. Other statutes support the property rights of minors. For example, California Corporations Code § 702(d) recognizes that shares of stock can stand in the name of a minor. The statutes and the above-discussed applicable cases lead to the conclusion that California law does not generally preclude a minor from holding title to real or personal property. Specific statutory restrictions and other concerns, however, make it beneficial to the interests of minors that proper custodians hold property on their behalf. For example, California Vehicle Code § 15500 states that it is unlawful for a minor who does not possess a valid driver's license to purchase, accept or otherwise obtain any vehicle of a type subject to registration. Also, if a minor holds title to property in his or her own name, the general inability to enter into binding contracts or effectively convey property might affect the ability to obtain or grant rights necessary for the protection or maintenance of the property, and might adversely affect the market value of the property.
Under Cal. Fam. Code § 6701, minors 3 cannot enter into contracts relating to real property, or personal property not in their immediate possession and control, and they cannot give a delegation of power. Cal. Civ. Code § 1556 also provides that minors are incapable of contracting. Cases traditionally have held contracts and conveyances by minors to be void or voidable. E.g., Sparks v. Sparks (1950) 101 Cal.App.2d 129, 225 P.2d 238. Thus, a minor might be unable to obtain or convey rights such as easements, sell crops or even obtain necessary insurance on property. Marketable title, and title insurance, being required in virtually every modern-day real property conveyance, an inability to deliver clear title not subject to avoidance by a court or dissaffirmance by the minor might render property effectively unmarketable and adversely affect its value. Accordingly, some custodial and/or trust arrangements can be seen as necessary to protect the property interests of minors.
California, like most other states, has adopted a version of the Uniform Transfers to Minors Act (UTMA). California Probate Code § 3900, et seq. It should be noted initially that, although that statutory scheme sets forth detailed provisions for the creation and transfer of custodial property on behalf of minors, it does not mandate that all property of minors be placed under the control of custodians. It evolved from the Uniform Gifts to Minors Act, the purpose of which was to provide a simple, inexpensive and nonexclusive method for making gifts to minors. See generally Stephenson v. Stephenson (1984) 162 Cal.App.3d 1057, 1067. Although the modern version of the Act is more broadly applicable, its provisions are not mandatory. The UTMA does provide language and forms of title which might appear well-suited to protecting the interests of minors who receive funds, such as Social Security benefits, or purchase property with such funds. It must be recognized, however, that, since there generally is no actual transfer or gift to a minor when property is acquired by a representative payee, trustee or other representative on behalf of a minor, using benefits paid on behalf of the minor under the Social Security Act, the UTMA statutory language is not mandatory and might be inappropriate for titling such property in any State.
1/ All references in this memorandum to the age of majority will be to the age at which an individual no longer is considered to be a minor under the general statutory provisions of the particular state or territory. It should be noted that the Uniform Transfers to Minors Act, as codified by certain states, defines minors differently for the provisions of that statutory scheme. See Hawaii Revised Statutes (H.R.S.) §§ 577-1 (age 18), 553A-1 (age 21); Arizona Revised Statutes (A.R.S.) §§ 1-215 (age 18), 14-7651 (age 21).
2/ 8 U.S.C. § 42, now 42 U.S.C. § 1982. Also noteworthy is fact that the referenced statute specifically pertains to both real and personal property.
3/ With the exception of emancipated minors. See Cal. Fam. Code § 7050.