Legal Question in Real Estate Law in California

Re: Joint Tenancy

That is a question that should have been addressed about 14 years ago. Now, it is whatever you can agree on, without going to a judge to make the decision.

Re: Joint Tenancy

The likely answer is that each individual on title has a 1/3 interest, although the latter added individual may not be a valid joint tenant (due to a lack of unity in acquisition). These 1/3 interests may be subject to certain offsets based upon one individual bearing the weight of the mortgage. It's complicated, you should consult with an attorney, however it's best for all concerned if it's resolved out of court (a partition action will net less to each owner).

Re: Joint Tenancy

First, the addition to title of the third owner would sever the original two-owner joint tenancy and, unless there was very careful draftsmanship of the later transaction, it's doubtful that the three of you are joint tenants. More likely than not, what you have is a tenancy in common, but the practical differences aren't great until someone dies; then the aspect of survivorship would have an important impact.

Next issue is who is entitled to the equity upon a sale. The easy answer is, of course, whatever you can agree upon; but you wouldn't be asking the question if it looked like agreement were going to be easy.

So, let's take a look at what would happen if each of the parties was represented by a smart lawyer, and there was a big negotiation, or perhaps a trial. How would things shake out?

The first issue would be whether there was an enforcable contract between any of you. Ideally, this would be an express written document, signed and possibly even notarized. Since that probably doesn't exist, the judge should inquire into whether there are other writings, not contracts themselves, that shed some light on the intent of the parties.

Conventional wisdom is that a writing is required to transfer any interest in real property, but when it comes to sorting out equitable interests that differ from legal (deed) interests, inquiry can be made into the intent of the parties.

If title to real property is acquired by X but Y paid the down payment, or if the proportionate ownership differs from the proportion of down-paayment, it may be held that there is a "purchase money resulting trust" in which X holds title for Y, since Y's money was used. The presumption of a resulting trust is overcome by (1) a contract to the contrary, (2) evidence that a gift was intended, or (3) a close family relationship (parent-child), where a gift is rebuttably presumed.

If the facts show a resulting trust (because no contract or contrary intent is shown), the person who made the down payment would get 100% of the net proceeds of sale, AFTER the person who made the mortgage payments was reimbursed every penny. No rent is due from any co-owner who lived in the house (again, unless there were an agreement to the contrary), since possession of the property is an inherent right of a co-owner.

If no resulting trust is found, and no contract, the court would order partition and division of the net equity equally, probably allowing a prior reimbursement of the actual cash outlays of each co-owner.