Legal Question in Real Estate Law in California

Re: Forced Sale

You have already taken the big hit.

Suppose you buy a $400,000 house for cash at the peak of the market in 2005. Then along comes 2009, and the market value is only $300,000. You've lost $100,000, whether you sell or not. What's the difference between a house that's worth $300,000 and $300,000 in cash? Nothing at all. Both of them are worth $300,000.

In some respects, you may be better off to sell and realize the loss; you may be eligible for some tax write-offs (although many would not be in a position to benefit from such losses and I do not offer this as tax advice). Also, selling and having the cash would give you investment flexibility; you could use the cash to buy a house with better appreciation prospects, to invest in the equally-depressed stock market, etc.

I know you didn't pay cash, but the economic facts of life are more or less the same whether you borrowed or paid cash; you have a loss. These comments are intended to give you a different perspective.

Re: Forced Sale

Why would you 'buy her out' if there is no equity? Why would she 'force a sale' when there is equity? It will likely be at least several years before housing prices recover enough to even bring you back to zero. If she wants to quitclaim to you to get off title, do so. You are probably misinformed about the ability to refinance, but if you are able to do so, then it would be in her best interest to cooperate in letting you alone refi, since she is currently obligated on the upside down mortgage.