Legal Question in Real Estate Law in Washington

I bought a house with my partner 18 years ago at the price about 130K, Each one of us put $13K down payment, and I borrowed $90K from the bank as15 year mortgage because I was the first time buyer and had good income, I was able to get the loan, thus I was the sole debtor of the loan. The house was used as a rental property since then and I did all the management of the house, my partner did nothing. The mortgage loan was paid off 3 years ago.

Now, we just sold the house for $300K after all the settlement cost, and I withhold $40K reserved for paying capital gain tax because the house title was under my name and I have to file the tax return. My partner demands to split $260K equally with me, arguing that we both put the same amount of money for the down payment. I don't think my partner deserve to split the $260K, and I am puzzling how much I should share with my partner. Does my partner have the right to split the $260K? How much should I pay my partner?

Best regards,

BnB

Asked on 2/20/10, 12:04 pm

1 Answer from Attorneys

Ann Sattler Aiken, St. Louis & Siljeg, P.S.
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This is a fairly complex situation but from the limited amount here, no, I don't think your partner has a legal right to half of the 260K. You each contributed the same amount initially (paid to you?) and then you used your credit and the combined 26K downpayment to get a loan and paid off that loan--presumably with the rent received (did your partner contribute to the loan payments though?). Arguably the house was your separate property. If you did all the management of the rental house etc and our partner truly did nothing, I'd still argue it was your separate property. Your partner has most likely an equitable lien in the proceeds (the downpayment amount plus interest) but not 130K. I presume the rental amounts starting becoming larger than the mortgage payments. If so, what did you do with the excess? He may have a claim to part of those too based upon percentage of the original downpayment.

Obviously it would have been better if you had had a property agreement between the two of you (perhaps do one going forward now if possible). How much you should pay your partner....well, that one is tricky. If it is becoming a point of contention, maybe err on the more generous side if you are staying together. Hopefully it doesn't become an actual legal dispute between you. If I can be of further assistance, please let me know.

Hope this helps!

DISCLAIMER: this is not legal advice and should not be relied upon as such.

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2/25/10, 1:02 pm

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