Legal Question in Real Estate Law in California

Re: house bought after divorce

Since you weren't married at the time you bought and lived in this house, family law and community property principles won't apply; the law would treat the situation under ordinary co-ownership principles.

Some of these principles are:

1. How title is held will probably have little effect on the current situation; it is probably as tenants in common, although joint tenancy is also a possibility. Some more exotic ways to hold title might include partnership property, or perhaps a trust is involved.

2. In addition to how title is held, a lawyer would want to know how the down-payment was made and by whom, and what kind of financing is in place. A co-owner who has made a contribution to down payment greater than his or her share of legal title may be entitled to a greater share of ownership than the title, as recorded, reflects.

3. A co-owner may legally borrow against his or her share of the equity, but most lenders will refuse to make such a loan because a cotenancy is not really very marketable collateral in case the lender needs to foreclose. Who wants to be a co-owner with a stranger?

4. Co-tenants are usually considered to be fiduciaries of one another with respect to the co-owned property. Therefore, taking out the HELOC without your knowledge or approval may have been a breach of fiduciary duty (if that's what happened).

5. Whether you have a legal or equitable claim on the money borrowed and sitting in his bank (or property he later buys with the money) is a question that may depend upon factors not discussed in your question, such as whether he took out the loan in secret, whether he overdrew his own equity in the property, his intent, etc., but it's very possible that you can assert a constructive trust over the funds.

6. There is a special kind of lawsuit designed to end co-ownership of real property; it's called a "partition." In you circumstances, it seems advisable to proceed with such a suit, rolling into it claims for breach of fiduciary duty and a request that the court impose a constructive trust on the HELOC loan funds. I would also look at the down payment situation to see if you are entitled to a bigger share of ownership.

7. In a partition suit, the court first determines the plaintiff's right to partition, which is pretty near automatic, then supervises either a subdivision, or more often, a supervised sale with division of the net proceeds according to what's fair after hearing evidence of the parties' contributions and takings.

There's little doubt that your ex is taking advantage of you and trying to suck all the equity out of the house as he splits the scene, and I think you are not only going to want to retain a lawyer, but that doing so promptly is financially wise.