Legal Question in Real Estate Law in California

Re: Tenants in Common

I would say your question calls for a two-part answer.

Since she is the one who moved out, you are in possession, and she's the "moving party" (pun unavoidable) on the buy-out issue, you are more or less in a position to call the shots, within reason, in an out-of-court, negotiated settlement deal. Unless you are a hurry to get her out of your life, I'd recommend asking for all your costs to be taken out of her 50% share. Get the deal in writing. In fact, I'd suggest a full-blown settlement agreement to avoid the possibility of a future lawsuit by her for something-or-other.

Now, the other part of the answer concerns what would probably happen if you couldn't reach an agreement and she took you to court. There is a special kind of lawsuit, called a "partition" action, in which one co-owner (joint tenant or tenant in common) can sue the other(s) to oblige a sale of the property and division of the net proceeds of sale. It is a two-part action. First the court makes a ruling on partition itself and enters an interlocutory judgment; then, after the property is sold, it enters a final order divvying up the proceeds based upon the net proceeds of sale and other evidence showing what split is fair.

The starting point is 50-50, but the court will hear and take into account evidence that one of the co-owners has paid more than his/her fair share of costs, and is thus entitled to reimbursement out of the proceeds of sale.

Items that are typically reimbursed are principal and interest paid, taxes, insurance, necessary maintenance, and sometimes improvements made by agreement but paid for by only one. The court will also award a share of rents received from third parties, e.g., if you have a paying roommate since she split, she would be entitled to half the rent since she is still a co-owner.

I am kind of a specialist in these kinds of cases, from both personal and law-practice experience; I also seem to be nearby (my Zip code is 94971) so contact me if you'd like a further free consultation.

Re: Tenants in Common

There is no rule to follow. You do not have to buy her out at all. I generally suggest that each of you decide how much you are willing to pay the other to buy out his or her interest. Whoever is willing to pay more buys the interest of the other. How you or she gets the money to make the purchase is none of the seller's business. Remember, between you you are buying and selling without a broker. But whoever keeps the house will someday sell and have to pay a 6% sales commission, on both halves.

If you can't agree upon a way to resolve the issue, the only alternative she has to force a sale is called a partition lawsuit, which will result in a court supervised sale of the property, then brokers and all expenses, including prepayment penalty on the mortgage, will have to be paid, then the balance will be split between you. So your girlfriend is made whole by receiving one half the equity after deduction for all of these expenses.

Re: Tenants in Common

I run accross these all the time. People buy homes together, but never get a written agreement as to when to sell, and how to split the proceeds.

Depending on when the prepayment penalty expires, I would give her a choice of either paying the costs of the penalty plus 1/2 of what would be normal selling costs, or come to an agreement on current price and give her a promissory note secured by the property with some interest, which will be paid to her through a refi after the expiration of the prepay penalty period.