Legal Question in Real Estate Law in California

Re: Real estate rental contract

Husband should request an accounting from brother, in writing and verbally. If Brother fails to provide the accounting, then Husband can sue for the accounting. Regardless of how title is held, both are responsible to account for all income and expenses on the property to the other - and that includes sharing the net proceeds. Formation of a LLC does not necessarily change the obligations between the two, but would provide personal liability protection.

Re: Real estate rental contract

I would suggest a strong letter giving the brother 15 days to correct all paperwork and enter into a written agreement. I also suggest that the letter request an accounting of funds received and paid. Should the brother not comply or ignore the letter a partition action should be considered. Please call me if you have any other questions.

Re: Real estate rental contract

Your husband needs to talk to a lawyer. Generally, co-tenants are suppose to share in the profits and losses associated with the property. If your husband's brother is not allowing your husband to participate, your husband may need to file an action for partition.

Re: Real estate rental contract

I assume the title is held as tenants in common (a 60-40 joint tenancy is impossible, but perhaps it is partnership property or something else).

Tenants in common, whether 50-50, 60-40, 99-1 or any other proportion, and absent any contractual arrangement between them varying their rights, each have a nonexclusive right of possession in the entire property. Your husband's brother can lease his right of possession to a tenant, but this has no effect on your husband's right of possession, so in effect the office tenant the brother rented to would have to share every square inch of the building with your husband, or someone to whom he rented! This possibility should make the tenant very uncomfortable, but he is probably unaware that he has dealt with only one of the owners.

As a practical matter, what the brother has done probably amounts to an ouster. When two or more persons concurrently own real property, an ouster occurs when an owner wrongfully denies a co-owner his right to possession. Civil Code section 843 describes a form of demand that the ousted co-owner may make upon the ousting co-owner. Making the proper CC 843 demand lays the groundwork for a later action for money damages.

Your husband is entitled to 40% of the net rents, after expenses. Filing a CC 843 demand is one way, and perhaps the easiest, way to assert his right to 40% of the $7,000 a month (after expenses). The demand can be prepared by an attorney as part of a fairly routine (two page?) demand letter and does not require filing a lawsuit initially (and hopefully that will not become necessary later, either).

Other, more aggressive possibilities include suit for money damages and an accounting; or, if there are irreconciliable differences, a suit for partition by sale.

Partition is a special kind of lawsuit in which one co-owner asks the court to require the sale of the co-owned property and division of the net proceeds in accordance with ownership, after adjustments to take into account rents that haven't been shared, excess contributions to purchase and maintenance costs by an owner, and other equitable adjustments. Partition actions can be long and involved, or they can result in speedy out-of-court settlements, or anywhere in between.