Legal Question in Real Estate Law in California

Your legal situation could be precarious. Advice here needs to be given carefully and with more facts on the table and in consideration by the advising lawyer.

First, a lawyer should inquire about the details of the supposed loan transaction. Even though there was no written agreement, is there anything that could be used to show a judge or jury that it was a loan, or an outright gift, rather than an advance made for the purpose of making a down payment on a house?

The proper characterization of the money furnished by the "someone" is critical here. If X hands Y a wad of money to make a down payment, and Y buys and puts his name on legal title,, then X has a claim that there is a "purchase-money resulting trust" in X's favor. X can demand that Y transfer title to her at any time. Y isn't the equitable owner; he is the "mere" legal owner, and in equity must convey legal title to X upon X's demand.

In certain circumstances, however, the above scenario does not create a purchase-money resulting trust. One of those is where the money advanced is demonstrably a loan. Another is where the money is a true gift. Gift circumstances are pretty unusual, and unless there is a very close relationship between X and Y, like parent-child or husband-wife, it'd take clear evidence of intention to give the money with no strings attached whatsoever.

Now, that leaves the possibility that you can demonstrate, in court, that the money was advanced to you as a loan, rather than as an investment or co-investment in the house you were about to buy with it.

What evidence is there? Were you given a check with the word "loan" on it? Did the house purchase documentation include any reference to the source of the purchase money? Perhaps most important, and assuming there is or was a purchase-money loan on the house, somewhere in the application there's probably something where the source of the down-payment money is mentioned, discussed or characterized. If there is any written evidence that the down payment was to come from X (the lady in question), you are looking at potential loss of ownership. If X made 100% of the down payment, X is entitled to become the 100% owner. Your mortgage payments since then would probably be regarded as rent, rtaher than as increments to equity.

There could be other evidence with a bearing on ownership in your living trust or elsewhere, including letters, e-mails, etc. exchanged arond the time of the purchase.

I recommend that you have an in-person discussion with a real-estate lawyer who is familiar with purchase-money resulting trusts, which is a somewhat obscure area of the law. I'd be happy to have an initial conference with you, no obligation.