Legal Question in Real Estate Law in California

It isn't something that is specifically chosen, like setting up a trust. Third party beneficiaries are people who are not parties to a contract, but will benefit from that contract. The doctrine allows the third parties to enforce the contract, even though they are not parties to it. More details would have to be known to determine whether that applies to your situation or not.

When a contract between A and B, who might be considered the "first party" and the "second party," is made expressly for the benefit of C, then C is considered a "third-party beneficiary" even though C doesn't sign the contract and may not have given any consideration. Civil Code section 1559 allows the third part to enforce the contract at any time before A and/or B rescind the contract. Generally, it's preferable not to rely upon making someone a non-signing third party beneficiary, but rather, to make the agreement expressly one between A, B and C. This avoids various questions that arise when the third party attempts to enforce the contract as such.