Legal Question in Real Estate Law in California

Home Loans

My boyfriend and I bought a house May 2005, it's his loan/mortgage, I did not have a steady job w/ 2 years history at the time. We borrowed the down payment from both of our parents, and we share a bank account to pay the mortgage payments. We have recently undergone demolition of our kitchen and are planning on remodeling it with $15,000 borrowed from my dad.

I told my boyfriend to put my name on the house and then I would borrow the money that my father has offered us. He refuses.

If my father were to loan him $15,000 would that give my dad or I any ownership rights?

Should we right up a contract or something?

Asked on 8/19/06, 4:24 pm

2 Answers from Attorneys

Robert F. Cohen Law Office of Robert F. Cohen

Re: Home Loans

Your father won't have an ownership interest in the house, nor will you. Interest in real property must be in writing. Think about having your boyfriend give your father a deed of trust so that something secures the loan. I'd also explore why your boyfriend won't put you on title. It might be because the lender won't permit it. Good luck, and buy some particle dust masks. You'll need them.

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Answered on 8/19/06, 4:59 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Home Loans

There is one sentence in Mr. Cohen's answer with which I would disagree; interests in real property don't have to be based on a writing in all instances. One exception to the written intrument rule is inheritance by intestate succession - when you inherit from someone by being next of kin when there is no will.

Another exception that may have arisen here is the so-called purchase money resulting trust. The principle is that when X acquires legal title but has used Y's money for the down payment, the law assumes that Y was intended to be the beneficial owner and that X holds "bare legal title" in trust for Y. Y may demand that X convey legal title to her at any time. The principle does not apply in situations where there is a contract to the contrary between the parties, or where their relationship is so close that the law presumes that a gift was intended (parent-child, usually a gift; spouse-spouse, sometimes a gift; fiance-fiancee, not usually a gift).

The resulting trust principle also extends to partial down payments or partial legal ownership. For example, if you put up 100% of the down payment and only get to be a 50-50 owner on title, the 50% the other party holds is held in trust for you; and if, as here, you put up half the down payment and get no deeded interest, the guy with 100% of legal title holds a 1/2 interest for himself as both legal and equitable owner, but as to the other 1/2, he holds only bare legal title and you are the equitable owner of that half.

Neither the mortgage obligation itself nor the making of mortgage payments affects ownership. Making payments may, however, give rise to a right to reimbursement when the house is sold.

Ideally, no one should invest large additional sums of money in this property until the ownership issue is resolved. Your boyfriend should put you on title by executing a quitclaim deed from himself to you for your 1/2 interest, and your father should get a note and second deed of trust for his investment. A local title company can prepare the paperwork for both.

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Answered on 8/20/06, 12:49 am

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