Legal Question in Real Estate Law in California

Re: Mortage problems

You can give your interest in the property to your granddaughter. There is no statute of limitations.

You have no obligations under a deed, but you may have some under the mortgage (deed of trust). In general, you are not personally liable for payment of a trust deed on a single-family residence in California. The lender's security is the property.

To make the gift, you would have to sign a deed, such as a quitclaim deed. This must be acknowledged before a notary public and recorded with the County Recorder where the property is located. If your interest in the property is worth more than $10,000, you may have to file a gift tax return.

I don't think that this gift would cause the property taxes to be reassessed, but you can check with the county assessor's office. You will have to complete a preliminary change of ownership form and submit it when you record the deed.

Re: Mortage problems

When two or more people (not married to each other) own property together, either as joint tenants or as tenants in common, each has the right to possess and occupy the property. It's sort of an enforceable roommate situation.

When one of the co-owners "throws out" the other, it is called an "ouster." The ousted owner has certain rights against the other. See Civil Code section 843.

In addition, a co-owner can force an end to an unsuccessful co-ownership situation by filing a special kind of lawsuit called a partition action. This asks the court to order a supervised sale of the property and a division of the net proceeds. The court can divide the proceeds other than 50-50 if fairness so demands, such as where one party has ousted the other or where the money or labor investments by the co-owners are very unequal.

Filing and prosecuting any lawsuit is expensive and time-consuming. Fortunately, filing a partition action frequently convinces the defendant owner to negotiate a settlement with the plaintiff owner before the matter goes to trial.

There are two other considerations. First, you do not say which of you made the down payment, or in what proportion. Generally the co-owner whose cash was used for the down payment has superior rights to the co-purchaser who merely tagged along; this is under a theory of "purchase money resulting trust" which holds that the co-buyer who took partial title without a commensurate investment holds that title as trustee for the person whose cash was used to make the purchase. The theory doesn't apply if the parties intended a gift, but is worth investigation here. In other words, you MAY be entitled to the entire ownership.

Finally, you need to distinguish your ownership from your obligation on the financing. You can give away ownership, but if the mortgage payments aren't made, a foreclosure could result, with loss of the home and damage to your credit as the likely result, although very likely the lender could not pursue you personally for any deficiency after the foreclosure sale.

The only statute of limitations likely to affect your rights is that you should enforce your right to co-possession (and against the ouster) within five years, or your daughter might acquire full ownership by adverse possession.

Because this is a family situation, involving (probably) large sums of money, and has tax and estate-planning implications, you should probably retain an attorney to assist you in straightening things out and protecting your rights, which seem to be substantial.