Bob and Jane inherited their mom’s house. They both co-own the house. Jane lived in the house for years taking care of mom before she died. Since mom died, Jane remains in the house, but is not paying for any expenses, except for utilities, still in mom’s name. Bob paid the insurance in case the house burns down, but no one has paid the property taxes, which is past due. There are issues between Bob and Jane going back many decades, meaning that Bob and Jane are not communicating. Perhaps Bob and Jane are estranged. Jane has her reasons why she will not communicate, but the bottom line is that it appears that she will not voluntarily pay for her share of the costs of property ownership and she is not willing to pay rent or move out or sell the house. What are Bob’s options?
Lawsuits should be a matter of last resort, only after the parties fully engage and are unable to resolve their differences. Most families can communicate and work something out but some families are or become dysfunctional for a myriad of reasons and at some point, a lawyer is brought in to advise of rights, duties, and responsibilities of these co-owners of real property.
Continuing with this hypothetical, let’s say I represent Bob, who tells me that Jane does not respond to his phone calls, e-mails, and text messages. Bob is concerned, knowing that he owns one-half of a house and that there are always ongoing expenses that must be paid. Bob is not receiving any benefits of ownership because Jane is living in the house, yet he is saddled with some or all the expenses of property ownership.
In my first meeting with Bob, I try to be a good listener and learn as much as I can in a limited amount of time about all relevant facts. I then explain to Bob the law of Partition and ask him to think about his options. What does he want? Does the law of Partition support what he wants? He understands that I will attempt to communicate with Jane to try to open dialogue.
If you are in a similar situation as Bob, or just curious, keep reading because I am about to explain what are Bob’s rights as a co-owner under the law of Partition in California. This will help Bob better understand his rights and responsibilities and help him formulate a reasonable position for negotiations.
I explained to Bob that all co-owners are responsible for property taxes, insurance and necessary maintenance and repairs in proportion to their ownership interests.
The issue of rent is more complicated. Is Bob entitled to rent for Jane living on the property? No, Because Jane, as a co-owner, is not required to pay rent. Theoretically, Bob could move in and live there too. If Bob tried to move in and Jane prevented him from doing so, he would have a claim for rent under what is known as an “ouster exception”. However, in this case, Bob does not want to move in. Nonetheless, the court may be able to award Bob compensation through an accounting, which is part of a partition lawsuit.
Bob tells me that he is not in a hurry to sell the property and is ok keeping co-ownership so long as Jane pays for the costs of ownership. Although Jane is only responsible for half the costs of ownership, she is getting the benefit of living in the house, which is probably worth more than paying for the taxes and insurance, maintenance, and upkeep. Bob suggests that Jane can live there for up to five years under this arrangement and then reassess options later.
In my letter to Jane, I explain the duties of co-ownership. Jane is informed that both co-owners have a duty to pay for the taxes and insurance. Because Bob paid 100% of the property insurance, he is entitled to reimbursement from Jane. Based on what is acceptable to Bob, the letter states that if she agrees to pay for all the taxes and insurance, as well as for all maintenance and repairs, that Bob would consider that equal to the value of her living on the property. In other words, if she pays the taxes and insurance and pays for all maintenance and repairs, so that Bob is not out of pocket for anything, then Bob is ok with Jane continuing to live in the home for a period of up to five years. Bob is offering a compromise, giving up some of his rights to avoid the stress and expense of litigation.
Let’s say that in response to the letter, Jane agrees to these terms and thus, a partition lawsuit is avoided, so long as Jane performs as promised. But what if Jane does not respond to the letter or perhaps, she agreed but later stops paying the taxes and insurance and is not taking care of the property? If, despite Bob’s best efforts to be fair, Jane essentially wants all the benefits of living on the property but does not want to pay her fair share, we are back to square one. Maybe that Partition lawsuit needs to be prepared after all.
The key point of this blog is that before a partition lawsuit is filed, try to work it out. Most likely, a co-owner will need the help of a lawyer to properly explore settlement options. In this hypothetical, Bob is willing to make sacrifices by deferring his benefits of ownership in hopes that the home, as an appreciating asset would still be benefit him in the long run, while showing some empathy to Jane. In my next blog, we will assume that Jane ignores Bob’s reasonable settlement offer, leaving him with no choice but to file the Partition lawsuit.