Legal Question in Real Estate Law in California

Have him sign a promissory note secured by a deed of trust on the property.

You have a problem if you just paid. Some people may think it is a gift or done on a voluntary basis, and volunteers don't get paid. Gifts don't have to be returned.

If you are going to lend him money, you need to get it in writing. As Mr. McCormick points out, it may be a good idea to have the loan secured by a recorded deed of trust.

I agree. Be careful with a secured deed of trust as the existing mortgage may have a due on sale clause.

I've had the benefit of reading the three previous answers, and here's my two cents worth.

(1) The distinction between a gift and a loan is important. You may be thinking "loan," but his or his heirs or their lawyers may argue "gift." Have something in writing. (2) A formal note and deed of trust is the most secure, but even a decent promissory note for each loan is better than nothing. (3) The problem with a recorded note and deed of trust will be updating it each time you make a new advance. (4) Maybe a local lawyer with real-estate finance experience could draft you a note and deed of trust where only a single recordation would be necessary, but future loans could be added to the note when made, either by an addendum to the note or a cross-reference therein to future advances made by checks bearing a brief cross-reference to the note and deed of trust. (5) I don't think there's a due-on-sale clause problem, because this is a subordinate loan, not a sale. (6) Have you considered setting up a secured line of credit for him at a local lender, perhaps co-signing with him? (7) What you're doing is risky enough, but if the house has little equity or is under water, it's extremely risky, even with security. Finally, (8) if he's married, the house is probably all or at least partly community property, and your brother's ability to pledge the house as collateral without his wife joining in so doing is limited or prohibited by Family Code section 1102(a).