Legal Question in Real Estate Law in California

Re: partnerships in real estate

Treating your relationship with your parents as a business partnership results in the type of relationship you have--you are looking only at the bottom line to see what profit is in it for you.

I take it that you are relatively young since you are going to go back to school. You do not say how long you paid the loan nor what dollar figure you put into the house. If you want to look at it in a business manner the following holds true: as full owners your parents gave up one half of the value of their house and then they gave up the rent it would have earned and the tax reduction advantage of being able to depreciate the building as a rental and to subtract the interest payments on the loan [so they gave up a lot]; your husband put in his separate property of the inheritance money that you have no legal ownership right to and paid a quarter of the loan payments, but lived rent free; you probbly at most put in your portion of the community property salary earnings he made but lived rent free [so probablyyou made money on the deal]. Yourparents also gave up their own home so that you and yuour husband might have a successful marriage.

So from a business standpoint, you are a freeloader and your partners are dissolving the business venture with the initial capital going back to the angels who put it up.

Your parents refusing to sign an agreement to give you more money to replace a house they gave you tells me that they realize you are greedy and self-centered. They give up their house for you and when they want to go back to their house, you say "what's in it for me!'You will never get onto your own feet because you go from one entity to another for your economic support. I would recommend counseling, but for your parents so they avoid falling into the same co-dependency trap; I think you know what you are like and have no desire to change it.

Having now asked for something free from a stranger, you will now complain how rotten I am because you "do,t get" anything from my response.

Re: partnerships in real estate

Golly. I have been accused of being blunt with LawGuru questioners, but I am not aware of anything in your question that would give me cause to conclude, as did my colleague, that you are either "greedy," "self-centered," or "co-dependent." If anything, all advice given by lawyers assumes that the client is "self-centered," that is, looking out for #1.

Your question doesn't contain nearly enough information, such as: the price your parents paid for the house; how old they are; how long you've been married to your husband; the fair market value of the house when your husband invested in the remodeling; tax issues; and whatever else is going on in the various relationships between and among you and your parents, you and your husband, your mother and your father, etc.

Obviously there are numerous legal issues that need to be untangled including what is the equity of each person in the house, including your and your husband's respective separate property and community property interests; and, most importantly, what happens if you do nothing and the loan is foreclosed on, or if you demand a court-ordered auction sale of the house and a division of the proceeds, which may also be your right. In other words you are correct that you may well have some bargaining power by threatening to be a stick-in-the-mud. It probably would not be to your advantage to insist on a forced sale or allowing a foreclosure, since houses fetch far less than their fair market value when sold at auction.

Simply put, you need to see a family law attorney regarding the entire situation, bringing all documentation that you have. This might cost you some money just for the initial consultation, since this is a complicated, wet knot that he or she must attempt to untie. I am sure if you call around, maybe to the county bar referral service, you will be able to find an attorney in your locality who will attempt to advise you at a reasonable cost.

Re: partnerships in real estate

Having the advantage of reading both Mr. Shers' initial commentary and Mr. Stone's critique, I don't know that I can add anything totally original and without bias toward one point of view or the other. On balance, I would agree with Mr. Stone, I suppose.

The main thing I can add is that while you have provided facts that invoke a whole bunch of different legal concepts, none of them individually is at all unique or difficult. Your case is complicated by the diversity of issues, not the rarity of any of them on a stand-alone basis. it's a mile wide and an inch deep.

First you should not sign the proposed agreement. Among other reasons, you may not have the legal power to agree effectively to what they're asking; if you signed, the existence of a possibly ineffective "agreement" would further muck up efforts to untangle this mess. Why trade a $5,000 legal bill for a $50,000 one?

Keep in mind that adding your names to title was probably a perfectly valid and IRREVOCABLE gift.

Sorting this all out requires an attorney with a solid grasp of family law and community property principles, but no PhD., some willingness to do elementary math, and a dollop of patience. Being too hasty or offhand or ignoring any of the facts will produce a way-wrong result, but on the other hand nothing you've discussed requires a lot of research or the creation of new legal precedents. Take it slow, take it cool.