Legal Question in Real Estate Law in California

Re: our partner is backing out

Asked and answered in the larger sense. You should sue your partner for breach of fiduciary duty. Partners are fiduciaries to each other and they owe each other the highest obligation of good faith and fair dealing.

Re: our partner is backing out

Sorry, but she is not rent skimming. Civil Code section 890(a)(1) defines rent skimming to include what's happening here, but only when it happens in the first year after acquiring the property.

Otherwise, I agree with the advice received so far. Your co-owner is a fiduciary in at least one way - as a co-owner.....there is case law in California holding that joint tenants and tenants in common are fiduciaries of one another, at least for some purposes. If your relationship were a true general partnership, and it might be, you would be fiduciaries as partners as well, which is an even stronger and better-recognized context. However, not every co-ownership of property results in a partnership.

Finally, acting as someone's buyer's agent creates a fiduciary relationship in which the agent has duties to the client to exercise a high degree af skill to assure the clients make a good purchase. Involving herself as a co-purchaser, and writing unfavorable deal terms, is very likely a breach or several breaches of duty.

A partition suit is indeed the usual exit strategy for an unhappy co-owner, but in these days of depreciated property with negative equity, the economics and therefore the tactical value of partition are different than in normal times.

The basic law of partition is that the property is divided and monetary issues between the former co-owners are settled equitably. Someone who has contributed excessively usually, but not always and not as to all items, gets reimbursed, the the co-owner who has been a financial drag gets penalized for much, but not necessarily all, of the burden. Formerly, partition was by subdivision; today, that is usually impractical due to small, fully built-out parcels and zoning and subdivision laws, so courts partition by sale and dividing up of the net proceeds in an equitable manner after considering competing claims of the former co-owners for reimbursement of this and that. If there are no net proceeds, and the sale produces a deficiency, I'm really not sure where the dust will settle; I'd have to go back and read partition cases from the Great Depression era.

In your situation, you can wait and see if she files a partition suit, or merely wants to negotiate her own buy-out on totally favorable terms. I think you may want to buy her out, since you seem to want to keep the property; but to do so on terms favorable to you, you'll probably need your own lawyer and either cross complain if the files first, or maybe better, file your own suit asking not only for partition, but also for damages for breach of fiduciary duty, etc.

Re: our partner is backing out

Who negotiated this deal? It's really sweet for her. Call a lawyer, go to court and get a court order to stop the rent skimming (an order that the tenant pays you directly). You might also have a claim for damages: if she was your real estate agent and set up a deal that is unreaasonably unfair to you, then she may also be liable for fraud and/or breach of fiduciary duty. The lawyer you consult will need to see all the paperwork including the original agreement in which she agreed to be your real estate agent.

Re: our partner is backing out

You should contact an attorney ASAP.

Obviously more facts are needed and all the paperwork must be reviewed, but it is quite possible that your partner/real estate agent is not only skimming, but violated her fiduciary duty to you. There may also be a claim against her brokerage firm.