Legal Question in Real Estate Law in California

Partition???

ASAP??

Sure, you can get your name off the loan, as soon as you can convince the mortgage company to allow you buy your way out of the mortgage you are responsible for. A partition action has nothing to do with the mortgage loan, only title to the property.

I must disagree with Mr. Nelson. In a partition action, EVERYONE with an interest in the property gets named as a defendant. This includes the tenants if there is a lease, and the lien holder(s) when there is a mortgage or deed of trust. If the court partitions the property by sale, the mortgage or deed of trust will be paid off (after the costs of sale but before any of the former owners get anything).

However, the real issue in this question is that one of the co-owners is already in a Chapter 7 bankruptcy. This means that the trustee must be made a party defendant in his/her capacity as trustee.

At that point, I am less certain what will happen. I believe the trustee can ask the bankruptcy court to dismiss the partition action, or he/she can elect to participate and let the state-court partition case determine the handling of this portion of the debtor's estate. In researching my answer, I've found one case that implies this is how bankruptcy and state-court partition cases interact.

In addition, the bankruptcy trustee may, subject to certain conditions, sell an entire jointly-owned property. This would produce a result similar to partition. At this point, I think your best bet is to consult with a bankruptcy attorney to get an expert opinion on how you should proceed in order to get the best result, consistent with time and risk.

I think what Mr. Nelson is trying to tell you is that a partition action is not going to relieve you of liability for the loan, unless the loan itself is paid off, or the lender agrees otherwise. To state it more bluntly, you are not going to be able to use a partition action to avoid liability for the loan, but still retain an interest in the property.

I agree with Mr. Whipple that if an owner is in Chapter 7, the bankruptcy trustee would have to be a party, especially since the debtor-owner's interest is part of the bankruptcy estate.