Legal Question in Real Estate Law in California

Oh, gosh, what a mess! Do you have a signed lease with the prospective tenants? There is a big clash of rights developing here.

If the house were still owned by a living trust set up by your mother before her death, and you were the successor trustee, you would have the sole right to determine who lives in the house, subject to the usual limitations on a trustee's discretion, and you could certainly rent it out.

However, your facts are pretty clear that the trust has distributed the ownership of the house to the beneficiaries, your sister and you. As co-owners, both of you are entitled to possession of the entire house and every room and inch thereof. You are roommates. Further, each of you has the right to surrender your right of possession to a tenant. You can rent, and your sister can rent. Neither of you, acting alone, can rent more than you've got, which is a shared possessory right. However, there are two other factors to consider. First, your sister seems to have given you an agency to act on your behalf by agreeing to allow you to rent the house. This could amount to her yielding her right of co-possession and allowing you to rent the entire possessory interest to the tenants.

The other thing is that having a shared right to occupancy and being allowed to exercise that right are two different things. A co-owner who is out of possession is not allowed to use self-help to move in and avail herself of her right of co-possession. Once Owner X, or someone such as a tenant deriving rights from Owner X's lease, is in actual possession of the property, Owner Y cannot simply move in against the will of Owner X or Owner X's tenant. Owner Y must go to court, claim an ouster, and get an order for shared possession. See Civil Code section 843 regarding ouster and action for restoration of possession.

Based on either the agency principle, I'd say the tenants probably have the right to sole possession, although it isn't clear they can exercise the right unless they move in and get actual possession before your sister moves in. If she get there first, the tenants can't move in, even though they may have the theoretical right to sole possession and at least a right to shared possession.

I hope you can explain this to your sister in time to avoid a confrontation. Too bad you don't have a written agreement. Contracts between co-owners prevail over the basic unmodified rights of co-owners discussed here. Contact me directly if you need further assistance.