Legal Question in Real Estate Law in California

Re: Quit Claming only 1/2 property rights

If you've already filed for bankruptcy, why are you not willing to be on title? I recommend whenever couples who aren't married buy real property, they both be put on title. A quit claim deed for half the interest would do the same thing. If the relationship doesn't work out, then if you're on title as a joint tenant or tenant in common, you simply split the proceeds from a sale.

Re: Quit Claming only 1/2 property rights

First, it is certainly possible for the owner of a 100% interest to convey a half interest in the property to someone else. For his own protection, the deed should carefully recite that only a half interest is conveyed; it should also specify the way the co-owners will hold title, e.g. "as tenants in common" or "as joint tenants." I recommend tenancy in common for unmarried couples.

Second, you don't have to think about (or talk about) reasons for doing this in negative terms such as "if, down the line our relationship doesn't work out." Everyone will die sometime; that will end the relationship, and it's prudent now to make sure the intended heirs get each partner's share, so even if the relationship lasts "so long as you both shall live," the separation of the interests is still useful.

Third, a written contract can be used instead of or in addition to a deed. There may be reasons to prefer a contract to a deed, for example, if transfer of a half interest to you would trigger a "due on sale" clause in his loan contract. Although the proposed deed would be a gift and not a sale, and only a 1/2 interest is involved, these due-on-sale clauses can be broad enough to include what you are discussing.

Re: Quit Claming only 1/2 property rights

Here's the second half of my answer.

Next, you don't say who is paying the down payment. There is a legal principle that when the up-front purchase money is paid (or committed to be paid) by one party, but legal title ends up in the name of another party, the person providing the money is entitled to ownership, and the other, title-holding, party is only an involuntary trustee holding title for the ultimate benefit of the payor. So, in effect, if you paid 50% of the down payment and he paid 50%, but he got 100% of title initially, it could be that you'd be entitled to demand a 1/2 interest. There's more to this, so don't rely on making a contribution to down payment alone (if indeed you're making one), but do note that this is a factor to consider.

There are other factors I usually counsel couples about when transferring property between themselves. One of these is the possible tax consequences. Transfers of real property between persons who are not married to each other generally trigger reappraisal for property tax purposes and various income-tax consequences (capital gains, gift tax, etc.) but none of these is likely to be a serious issue since little if any appreciation will have occurred. Nevertheless, you should probably consult a tax advisor to see if anything negative is likely to happen here.

Another factor weighing in favor of a written contract, whether or not you also do a quitclaim up front, is agreement upon payment (and treatment) of expenses such as mortgage interest and principal, property taxes, maintenance costs and the like. These can be contentious items in the event of a split, and the legal effect of one or the other having paid them is not easy to predict in the absence of an agreement that they will be reimbursed, that they have an effect on equity (or not), and so forth.

There is a final possibility to consider, and that is registration as domestic partners, This new provision of California law was originally passed, I think, to give same-sex couples some of the benefits of marriage in areas such as co-ownership of property. The law is also helpful to older straight couples who don't want to marry for various reasons, but who want the benefit of community-property law repecting their commingled assets. You might want to read up on this -- probably not for you, but worth knowing about.

Re: Quit Claming only 1/2 property rights

You should have a written agreement stating all different issues, including sharing costs and increased equity.

JOEL SELIK

Attorney at Law www.SelikLaw.com

"bringing issues into Focus"

Injuries, Death, Nursing Home and Malpracitce

800.894.2889

760.479.1515

702.243.1930

Licensed to Practice Law in California and Nevada

B.A. Industrial Psychology, B.S. Human Communications

CA Real Estate Broker, CA Superior Court Judge Pro Tem, Mediator/Arbitrator

CONCENTRATING IN ELDER ABUSE, LITIGATION AND COLLECTIONS

Personal Injury, Contracts, Tax Matters, Business,

Malpractice, Appeals, Elder Neglect/Abuse/Nursing Home Malpractice

Real Estate, and Other Legal Matters

This is just general information. No representations are made and no attorney client relationship is established by this communication. In most matters there are strict time limitations within which actions may be taken or your rights will be compromised. We are not taking any action on your matter and will not be considered your attorney or tax representative until both you and we have signed a fee agreement.

We, therefore will take no action on your behalf unless a written retainer agreement is signed. There are strict deadlines, called statutes of limitation, within which claims or lawsuits must be filed. Therefore, if you do not retain SELIKLAW, you should immediately seek the services of another attorney or other advisor.