Often in expensive real estate markets, people will join together to purchase a home. Sometimes those people are just friends who are trying to combine finances to be able to qualify to afford a house. While combining with others to purchase a home can help people afford real estate, it can also create a problem when one or more parties wants to sell the house or leave the area. Sometimes a job move may encourage a party to want to get back their investment. In addition to getting back the money invested, often both parties may be on the mortgage. Being on a mortgage will limit and reduce your chances of getting a second mortgage depending on your income and assets and debts.
What happens when one of the friends wants to sell the property?
In California, a party can force a sale of the property through a court case or litigation. The court case or litigation could force the sale of the property. Often during these cases, the parties will either work out a voluntary sale or refinance of the property to remove the owner that wants out of the property.
What will happen if one party put in more money than another party?
In cases like this, there is often an accounting for monies paid toward the property. These amounts like down payments, capital improvements, mortgage payments, insurance, taxes will generally be taken into account. Also to be considered is who lived in the property as they arguably received some benefit by living in the premises. Finally, if the property was rented out, then the rental income will be accounted for as well.
What if the property has gone up in value?
If the property has gone up in value (the hope), then this should be captured when there is any sale of the property because of the sale price. However, if there is a refinance of the home so that there is no sale of the property, then often an appraisal will be done to determine the appropriate value for any payout.
What if the home was a gift in contemplation of marriage like an engagement ring?
Sometimes a home might be put in someone’s name in contemplation of an expected marriage when two people are engaged to be married. In those cases, the house could be much like an engagement ring. In California, there is case law that would support the position that arguably if the gifting spouse is spurned by the recipient, then the gifting spouse should get the house back, just like a broken engagement. In Priebe v. Sinclair (1949) 90 Cal.App.2d 79, a jilted groom recovered an engagement ring, a brooch and some cash from his defecting bride.
Shaw v. Shaw (1964) 227 Cal.App.2d 159, was an action under Civil Code §1590, to recover real property placed in joint tenancy in contemplation of marriage, brought against the donee on her refusal to marry. The property was awarded 100% to the donor, upon evidence that the parties lived together approximately four years, that the donor placed the property in joint tenancy in contemplation of their marriage, that the donee made repeated excuses for not marrying, and that following their separation each party married someone else.
What about an oral contract regarding the purchase of a home?
The California Supreme Court in Marvin v. Marvin (1976) 18 Cal.3d 660, where an unmarried woman who was not on title to her partner’s property, was allowed to try to enforce what she contended was an oral contract between them entitling her to an interest in his real estate and other assets. The Supreme Court held that quantum meruit or equitable remedies such as constructive or resulting trust could be used to establish rights in the property when warranted by the facts of the case. In Marvin, the couple had been together in the property for seven years. In Marvin, the woman had substantial evidence of her contributions to the household over time, and of her discussions with her partner about their agreement. The equities called for her to be compensated.
What if two unmarried people contribute significantly to the purchase or upkeep of the property?
In the case of Milian v. DeLeon, (1986) 181 Cal.App.3d 1185. There was substantial evidence that the woman (who had never lived in the home) had turned over to the man substantial sums of money toward the property over time, and that they had commingled their assets for that purpose. In that case, the financial contributions toward the house were nearly the same dollar amount. Further, the parties paid each other’s bills.
Partition is available even if the cotenant might loss money from the sale of the property.
A cotenant is entitled to partition as a matter of absolute right; that he/she need not assign any reason for his/her demand; that it is sufficient if he/she demands a severance; and that when grounds for a sale are duly established it may be demanded as of right. To grant it is not a mere matter of grace. The only indispensable requirement to its award is that a clear title be shown, and in no event is a partition to be denied because it will result in financial loss to the cotenants. De Roulet v. Mitchel (1954) 70 Cal.App.2d 120.
Partition is governed by statute. CCP §§872.010 et seq. An action for partition is considered a special proceeding. Waterman v. Lawrence (1861) 19 Cal. 210, but it is also an equitable proceeding to which principles of equity apply. Akley v. Bassett (1922) 189 Cal. 625; Penasquitos, Inc. v. Holladay (1972) 27 Cal.App.3d 356, 358. The court may, in all cases, order allowance, accounting, contribution, or other compensatory adjustment among the parties according to the principles of equity. CCP §872.140.
