Legal Question in Real Estate Law in California

Re: Two relatives owns a house, and selling

The two relatives can divide the money from the sale anyway they want, if they agree. The income of property owners has nothing to do with anything. If the parties do not come to an agreement as to how they wish to divide the money, then they could seek arbitration, or as a last resort, file a lawsuit to get a court determination as to who gets what.

Re: Two relatives owns a house, and selling

First, the co-owners are, of course, at liberty to divide the net proceeds of sale as they choose, but this assumes they can reach an agreement. So, my answer stresses what an arbitrator or court might decide if the matter went to arbitration or litigation.

The income information has no bearing on the result, but you've not mentioned several possibly important facts, such as:

(1) What is the relationship of the co-owners?

(2) What was the initial contract, agreement or understanding between the co-owners? (Even though transfers of interests in real property usually require a written contract, this is not always the case among co-purchasers...so oral agreements or even implied understandings as to what, exactly, the co-owners had in mind initially could affect the outcome in court).

(3) How is title held?

(4) Who is liable on the mortgage (if any), and who has made payments since the purchase for principal, interest, taxes, insurance, maintenance, improvements, etc.?

(5A) Who has lived in the house?

(5B) Did either co-owner "oust" the other by interfering with his/her right of co-possession?

(6) Has rent been collected from third-party (non-owner) tenants?

(7) Are there any facts showing that one or the other of the owners intended to make a gift of an interest in the property to the other owner, or was this clearly a "strictly business" deal?

Unless there is a gift or a different intended outcome shown by an agreement, a court could order a sale, then divide the net proceeds after selling costs and pay-off of liens in proportion to the share of down payment made by each, and then make adjustments for necessary expenditures such as interest and taxes before awarding the adjusted shares to the former co-owners.