Legal Question in Real Estate Law in California

Re: real-estate

Your question has answers, and I'm pretty sure you can end up with a decent outcome, but the proper process and best way to get the result would require knowing a few more facts:

First, what is the nature of your agreement with the friend? Obviously, any lawyer would want you to have the whole thing in writing. However, it is not legally essential to have the deal in writing if the arrangement meets the definition of a partnership. Not all co-ownership of property is a partnership, however.

Also, lacking a specific written contract, sometimes certain terms or proof of the existence of an oral agreement can be shown by related signed writings such as the purchase contract with the seller, the loan applications, the loan agreement, etc. under the principle of "integration."

Second general area of questioning relates to the down-payment, including closing costs. Was it completely shared, or did someone put up more than the other(s)?

Third question area a lawyer representing you would ask is how was title taken and held?

Next, we'd need to know which of you is liable on the loan, i.e., who are the borrowers.

Finally, it would be helpful to know the position being taken by the non-paying friend....is he/she unable to make the payments, or is there a dispute about the liability or duty to come up with the money? Unable or unwilling makes a difference in how we would approach working out the situation.

I'd recommend negotiation and mediation as a starting point, and if that fails or he/she won't participate, then some legal action should follow. Whether that would be a suit for breach of fiduciary duty to co-owners/partners, suit for breach of contract, or an action to partition the property by court-ordered sale and division of the net proceeds depends on the answers to the questions outlined above.

There is also the possibility that the ownership percentages shown on record title could be altered to conform to the down-payment contribution percentages (if different from title percentages) by assertion of a purchase-money resulting trust in favor of the over-contributing co-owner.

Please contact me directly with particulars if you'd like a more particularized free analysis.