Partition Defendants Alleging that their Co-Owner is Only a Co-Borrower Have an Uphill Legal Battle
Partition actions sometimes involve disputes over the ownership of the property. This is important due to the requirement that an interlocutory judgment of partition find “the interests of the parties in the property….” Code Civ. Proc. § 872.720(a). This refers to “the statute’s plain requirement that the parties’ ownership interests be determined” in the interlocutory judgment. Summers v. Superior Court (2018) 24 Cal.App. 5th 138, 143.
Sometimes, the defendant in a partition action alleges ownership issues by claiming that the plaintiff was merely a co-signer or co-borrower who was added to title solely for convenience for the lender to allow the property to be purchased or refinanced. In so doing, defendants question whether the record title (legal title) as reflected in the deed history should be deemed to accurately reflect the equitable ownership (true ownership).
Evidence Code 662 Creates a High Barrier for Claims of Ownership Contrary to Record Title
By raising this question of whether the plaintiff is a co-owner, partition defendants trigger California Evidence Code Section 662, which is a fundamental rule of California real estate law that prevents record owners from being subjected to low probability claims that the record title does not reflect the equitable ownership.
“According to the ‘form of title’ presumption, the description in a deed as to how title is held is presumed to reflect the actual ownership interests in the property.” Carne v. Worthington (2016) 246 Cal.App. 4th 548, 556 (quoting In re Marriage of Brooks & Robinson (2008) 169 Cal.App.4th 176, 184–185).
This fundamental rule of California real estate is codified as Evidence Code § 662, which provides that: “The owner of the legal title to property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof.”
“This section applies when there is no dispute as to where legal title resides but there is question as to where all or part of the beneficial title should rest.” Coyne v. De Leo (2018) 26 Cal.App. 5th 801, 819, as modified on denial of reh’g (Aug. 28, 2018).
Generally speaking, these claims that the plaintiff was merely a co-borrower, despite being on the deed (record title), involve some type of oral agreement for which there is little or no documentary evidence of such an understanding at the time that the plaintiff became a co-owner. This claim usually centers around the time when the defendant and plaintiff jointly acquired the property, though it can also involve claims when the property is refinanced after acquisition.
“Section 662 applies to allegations that a party has beneficial rights to property pursuant to an oral agreement, even if title is not in their name.” DeMartini v. DeMartini, No. 214CV02722JAMCKD, 2018 WL 2102350, at *6 (E.D. Cal., May 4, 2018). The DeMartini court cited to California law providing that Section 662 applies where the “issue at trial was whether the parties had entered into an oral agreement that they were purchasing the property as equal partners.” Murray v. Murray (1994) 26 Cal.App.4th 1062, 1067. Thus, a plaintiff who “sought to establish a 50% interest in the property pursuant to an oral partnership agreement” based on “a contractual agreement which, if proven, would rebut the presumption that the…owners of legal title, [was] also the full beneficial owner…was required to establish her claim by clear and convincing evidence.” Tannehill v. Finch (1986) 188 Cal. App. 3d 224, 228.
The form of title “presumption cannot be overcome solely by tracing the funds used to purchase the property.” In re Marriage of Broderick (1989) 209 Cal. App. 3d 489, 496. This means claims that the defendant made the down payment should be deemed insufficient to overcome this presumption of legal title since unequal down payments generally form the basis of offsets.
The standard required by California Evidence Code section 662 is high. “[T]he Supreme Court has repeatedly characterized [the clear and convincing evidence standard] as requiring evidence which is ‘clear, explicit, and unequivocal,’ ‘so clear as to leave no substantial doubt’ and ‘sufficiently strong to demand the unhesitating assent of every reasonable mind.’” In re Marriage of Weaver (1990) 224 Cal. App. 3d 478, 487, n. 8 (applying Evid. Code § 662)See People v. Caruso (1968) 68 Cal. 2d 183, 190 (“The phrase ‘clear and convincing evidence’ has been defined as ‘clear, explicit, and unequivocal,’ ‘so clear as to leave no substantial … Continue reading
What this means is that co-owners of record to real property in California should not be afraid to file a partition action in California despite claims by their co-owner of being the full owner of the property with little or no evidence.
Statute of Frauds in California Partition Actions Also Presents a Barrier
Yet another hurdle that a partition defendant will need to overcome is the statute of frauds in California real estate.
Code of Civil Procedure § 1971 makes clear that: “No estate or interest in real property, other than for leases for a term not exceeding one year, nor any power over or concerning it, or in any manner relating thereto, can be created, granted, assigned, surrendered, or declared, otherwise than by operation of law, or a conveyance or other instrument in writing, subscribed by the party creating, granting, assigning, surrendering, or declaring the same, or by the party’s lawful agent thereunto authorized by writing.”
Civil Code § 1624(a)(3) explains that: “The following contracts are invalid, unless they, or some note or memorandum thereof, are in writing and subscribed by the party to be charged or by the party’s agent:… An agreement…for the sale of real property, or of an interest therein.”
Often times, the defendants has nothing but a claim of an oral promise with no documentation. The statute of frauds places strict limits on these type of claims.
Sometimes, the only evidence is the claim by the defendant that they paid the entire down payment. However, the form of title “presumption cannot be overcome…by testimony of an intention not disclosed to the grantee at the time of the execution of the conveyance.” In re Marriage of Broderick (1989) 209 Cal.App. 3d 489, 496.
If you are the owner of record title in a grant deed, quitclaim deed, trust transfer deed, or other conveyance showing that you are the owner, but your co-owner doesn’t think you are an owner, contact a partition attorney in California today to discuss your options to force the sale of your property to unlock your equity.
Contact an Experienced Partition Attorney in California
If you want to end your co-ownership relationship, but your co-owner won’t agree, a partition action is your only option. Our knowledgeable partition lawyers have years of experience ending co-ownership disputes and can help you unlock the equity in your property. For a free, 15-minute consultation with an experienced partition attorney at Talkov Law, call (844) 4-TALKOV (825568), email us at info(at)talkovlaw.com, or fill out a contact form online. Contact Talkov Law today to find out how you can pay nothing today and have your legal fees paid from the proceeds of sale of your property!
|↑1||See People v. Caruso (1968) 68 Cal. 2d 183, 190 (“The phrase ‘clear and convincing evidence’ has been defined as ‘clear, explicit, and unequivocal,’ ‘so clear as to leave no substantial doubt,’ and ‘sufficiently strong to demand the unhesitating assent of every reasonable mind.’”); see also Butte Fire Cases (2018) 24 Cal. App. 5th 1150.|