Legal Question in Real Estate Law in California

The simple answer is you issue and record a deed from yourself to yourself and the other person. Whether to do it by a grant deed or a quitclaim deed, and whether to do it as tenants in common, joint tenants or some other form of title, however, are not such simple questions. Also, from both direct and indirect experience, I can assure you that becoming partners in a vacation property is not anywhere near so simple as just deeding the other person 1/2 and taking their money. There are tax consequences immediately and in the future, serious mortgage issues unless you own it free and clear, because there is sure to be a due-on-sale clause in your mortgage. And then there are all the issues of use, occupancy, income allocation (if any), expense allocation (repairs, maintenance, insurance, etc.). Trust me, a few hundred dollars spent on an attorney to guide you now, will save you thousands down the road.

The first step is to clear the proposed sale with any lender having as loan containing a due-on-sale clause. Most do. Lender policies differ, but many will give you a written waiver of the due-on-sale clause, possibly charging a fee.

The sale will trigger reappraisal of the portion sold to current market value, with a likely increase in property taxes, but who knows? The value may have decreased.

There will be a capital gain or loss for you to report on your next federal and state tax returns.

If the two of you engage in renting out the property as co-owners, you might be considered partners and come under partnership law, with the attendant risks.

You'll need to review (and change) your insurance. Also, think about the utilities.

You should have a written agreement with the co-owner covering scheduling of use, noting that while X is using the property, Y can't also use it. Keep in mind that one of the aspects of co-ownership of real property is that each co-owner has the right of co-possession of the entire property at all times, but these rights can be modified by contract.

The agreement can and should cover the other concerns mentioned by Mr. McCormick, and you might throw in something about how the co-ownership could be broken up in the event of future disputes.