FLARPLs Still Exist

Now that housing market has improved, many people in California have equity in their houses. Many of those people are married and hold the deed to their property in joint tenancy. This means, that they own the property equally, and if dies, all interest in the property goes to the surviving spouse.

However, many couples do not make life’s journey together to the end, and find themselves divorcing to end their marriages. When this happens, lawyers and legal fees are involved, and many people are not able to pay the fees. But what if you can’t pay legal fees? You can’t sell the house to get money – unless your spouse agrees and you divide the equity amount. Usually, the house remains as a community asset and goes through the divorce procedures along with the rest of the property and other issues (child custody/support, etc.)

The California legislature, recognizing this problem enacted Family Code Section 2033, or the Family Law Attorney’s Real Property Lien (FLARPL). If there is enough equity in the home or commercial property, some attorneys will agree to provide legal services knowing they will be paid later when a home is sold. The attorneys know this because they place a lien on the property, thus a FLARPL.

FLARPLs come with their own set of problems. There are many rules to follow before a FLARPL can be placed. Often the other spouse objects to the placing of the FLARPL, providing for more court appearances and court decisions (thus increasing legal fees). And sometimes distrust will arise between the client and the lawyer. The client may believe that the attorney is deliberately generating legal fees knowing that there are enough funds available. It is never a good thing when distrust arises between client and his/her attorney.

If you want to use a FLARPL to pay for your legal fees, be sure you understand all of the rights and obligations involved.

Family Code Section 2033:

(a) Either party may encumber his or her interest in community real property to pay reasonable attorney's fees in order to retain or maintain legal counsel in a proceeding for dissolution of marriage, for nullity of marriage, or for legal separation of the parties. This encumbrance shall be known as a "family law attorney's real property lien" and attaches only to the encumbering party's interest in the community real property.

(b) Notice of a family law attorney's real property lien shall be served either personally or on the other party's attorney of record at least 15 days before the encumbrance is recorded. This notice shall contain a declaration signed under penalty of perjury containing all of the following:

(1) A full description of the real property.

(2) The party's belief as to the fair market value of the property and documentation supporting that belief.

(3) Encumbrances on the property as of the date of the declaration.

(4) A list of community assets and liabilities and their estimated values as of the date of the declaration.

(5) The amount of the family law attorney's real property lien.

(c) The non-encumbering party may file an ex parte objection to the family law attorney's real property lien. The objection shall include a request to stay the recordation until further notice of the court and shall contain a copy of the notice received. The objection shall also include a declaration signed under penalty of perjury as to all of the following:

(1) Specific objections to the family law attorney's real property lien and to the specific items in the notice.

(2) The objector's belief as to the appropriate items or value and any documentation supporting that belief.

(3) A declaration specifically stating why recordation of the encumbrance at this time would likely result in an unequal division of property or would otherwise be unjust under the circumstances of the case.

(d) Except as otherwise provided by this section, general procedural rules regarding ex parte motions apply.

(e) An attorney for whom a family law attorney's real property lien is obtained shall comply with Rule 3-300 of the Rules of Professional Conduct of the State Bar of California.

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