Legal Question in Real Estate Law in California

Re: Mortgage Fraud and Partition

Your answer lies largely in the fact that you have been sued......you don't really have a realistic option of sitting on the sidelines unless you are willing to lose everything. Well, more specifically, unless you are willing to put up with your "ex" getting exactly the relief he asks for in his lawsuit. Here are some considerations:

1. If the house is "under water," i.e., there is no equity, you may just want to let him win the suit by default, by not answering and defending. This strategy might be made even more logical if you are not a borrower on the loan or loans. Before deciding not to defend, you should go over all the loan and title documents with a lawyer to make sure something critical isn't being overlooked.

2. Winning a quiet title action by default is not particularly easy. Your ex will still have to go before the judge with substantial evidence of his title. Under the circumstances, the judge could perhaps even refuse to give him full clear title by default.

3. It's somewhat suspicious that, on the one hand, he refused to buy or sell, then a little later filed for quiet title and partition, essentially paying a lawyer to get him what he refused for free a little earlier. Does his suit claim more than a 50% equity interest?

4. There is a concept called a "purchase-money resulting trust" that says, absent an intention to make a gift, or a contract to the contrary, the beneficial or equitable ownership of property divides according to the source of the purchase money. Did he put up more purchase money than you? Mortgage borrowing doesn't count, so with 100% financing it's often hard to identify any purchase money at all, but deposits and cash paid into escrow for closing costs, etc. would count.

5. Finally, fraud is a significant element in determining the outcome of legal disputes; if you can prove fraud by your opponent and that you were harmed by it, your chances are better as either plaintiff or defendant.

Your choices are to default, to defend, or to counterattack by cross-complaint. Choosing probably starts with an economic analysis that includes the equity in the property, exposure on the loan(s), if any, and probable legal fees.

I have some in-depth experience in this general area (co-owner disputes) and a number of Southern California clients, and would be pleased to give you a complimentary further analysis if you contact me directly with details.

Re: Mortgage Fraud and Partition

Both you and your ex can be sued by the lending bank for conspiracy to defraud, along with the loan officer/broker. While you can "sue" your ex or anyone else you wish for your contribution, it is costly and the bank has a far greater chance of success against all of you than you have of persuading the court that you were duped.

Re: Mortgage Fraud and Partition

Answered this already.