Legal Question in Real Estate Law in California

Re: Real Estate Partnership

There will be consequences for his failure to contribute, but those consequences will probably not be so harsh as to have him forfeit his entire interest.

The manner in which you impose or enforce those consequences can be complicated.

You should consult with a lawyer regarding the details of your situation.

Re: Real Estate Partnership

As Mr. Whipple expertly points out, yours is a complex situtation. The $3,100 you are arguing about could easily be eaten up in attorney fees [12.4 hours at $250 per hour]. You are in a risky business; it is more important that you feel comfortable with your partner, as the $3200 will be recoverable once your sell the house or refinance. You have to decide whether you two can still function as business partners.

Re: Real Estate Partnership

The starting point would be to determine whether a partnership was created. Not every co-purchase of real property results in a partnership, but a review of the contract you wrote up and the reasons for co-purchasing would allow a lawyer (or later on, a court) to decide whether principles of partnership law or of real-property law ought to be applied here.

If partnership law applies, a court could very well rule that, despite how title is shown down at the recorder's office, the house is really neither yours, nor part yours and part his, but instead belongs to the partnership!

If real property law applies because no partnership was formed, you are the sole legal owner because title is held in your name alone, but almost certainly he has an equitable one-half interest based on his 50% contribution to the down payment, and you hold his half interest as the trustee of an involuntary, implied-in-law trust of which he is the beneficiary, and your duty as trustee is to convey said half interest to him on demand. Such implied-in-law trusts are called purchase-money resulting trusts. Under real-property law, you are entitled to reimbursement for your excess outlays such as 1/2 the property taxes.

Under partnership law, each partner is deemed to have a capital account, which is charged or credited for capital contributions and draws, and the like. While you get a credit for your excess investment, you don't necessarily have a right to withdraw it or demand an equalizing papment from your partner. Instead, the court would look at your agreement and determine your relative rights based on its terms. If it is silent on this point, you might have to wait until the dissolution of the partnership to be made whole for your excess contributions to partnership capital (such as the tax payment).

Finally, the legal process for breaking up an unhappy co-ownership is different from that used to dissolve and wind up a partnership. The former usually involves a lawsuit for partition. Partnerships are closed down under procedures set forth in the Uniform Partnership Act of 1994, which is part of the Corporations Code (see sections 16601 to 16807).

I'd guess yours is a partnership, but without seeing your contract and interviewing you at length, that's only a hunch guess. Either way, I'd say your chances of being awarded 100% of the house are slim to none.

Re: Real Estate Partnership

Your very BEST route here would be to have an attorney review the actual agreement you signed with your partner. This will reveal your and/or his legal rights and/or obligations clearly thereafter. For further, prompt assistance, email our Law Firm directly.