My Co-owner is Not Paying the Mortgage

If your co-owner is not paying the mortgage, this may be an early sign of a co-ownership dispute. In many scenarios where a co-owner is unwilling to contribute to a co-owned property, there will be disagreements on the disposition of property and how to manage the liabilities that accompany real property ownership. Or, perhaps the co-owner is not willing to sell, even though they can’t afford the property. If talking to your co-owner does not lead to any change, it may be in your best interests to retain an experienced partition attorney to end your co-ownership dispute.

What are the Consequences of an Unpaid Mortgage?

When a borrower fails to make mortgage payments as agreed upon in the loan contract, the mortgage lender will seek to obtain ownership of a property through a legal process called a foreclosure. Technically, California uses trust deeds, rather than mortgages, meaning the foreclosure is known as a “trustee’s sale.”

In essence, it is the forced sale of a property by the lender to recover the outstanding balance of the loan. The process typically begins with the lender issuing a notice of default to the borrower, indicating that they have fallen behind on their payments. If the borrower does not remedy the default by bringing the payments up to date or negotiating a different arrangement with the lender, the lender can proceed with the foreclosure process. This non-judicial foreclosure process occurs without a court action in California.

Will Partition Accounting Allow Co-Owners to Recover Unequal Mortgage Payments?

Since “[e]very partition action includes a final accounting according to the principles of equity for both charges and credits upon each co-tenant’s interest,” unusual payments can be recovered in the partition and sale of the property.[1]Wallace v. Daley (1990) 220 Cal.App. 3d 1028, 1035.

The California partition statute that allows the court to distribute the proceeds from the sale of a property in a partition in an equitable manner is California Code of Civil Procedure 872.140, which provides that:

The court may, in all cases, order allowance, accounting, contribution, or other compensatory adjustment among the parties according to the principles of equity.

California Code of Civil Procedure 872.140

“When a cotenant makes advances from his own pocket to preserve the common estate, his investment in the property increases by the entire amount advanced. Upon sale of the estate he is entitled to be reimbursed his entire advancement before the balance is equally divided.”[2]Southern Adjustment Bureau, Inc. v. Nelson (1964) 230 Cal. App. 2d 539, 541.

In Wallace v. Daley, a California court found that “[e]very partition action includes a final accounting according to the principles of equity for both charges and credits upon each cotenant’s interest. Credits include expenditures in excess of the co-tenant’s fractional share for necessary repairs, improvements that enhance the value of the property, taxes, payments of principal and interest on mortgages, and other liens, insurance for the common benefit, and protection and preservation of title.”[3]Wallace v. Daley (1990) 220 Cal.App.3d 1028, 1035 Talkov Law’s experienced partition attorneys can expedite the process of the accounting, including through a partition referee report on offsets and accounting.

Implications of Financial Distress

In many cases, overdue mortgage payments are an initial indicator of property neglect. Distressed properties frequently suffer from inadequate maintenance, lack of insurance, unpaid taxes, and postponed repairs. Vital elements such as the lawn, roof, and plumbing can rapidly deteriorate without attention, resulting in ongoing depreciation and costly rehabilitation in the future. Co-owners sharing a property with someone failing to pay the mortgage may find themselves in a precarious situation.

In fact, the failure of all co-owners to agree to sell a property when no one is paying the mortgage is itself a sign of distress. Perhaps the co-owner in possession is undergoing financial distress such that they have no money to move, let alone an income to pay the rent or mortgage elsewhere. Maybe the co-owner is playing a game of chicken- hoping the other co-owner gives them more than they are owed if they agree to a sale, or pays the mortgage to avoid a default or decreased credit score.

Filing a partition action can offer a solution to dissolve disadvantageous co-ownership arrangements effectively before the property’s condition worsens, leading to further depreciation and potentially irreparable damage.

Talkov Law’s Partition Attorneys Can Help

The failure of a co-owner to pay for a mortgage signals a broader neglect that can lead to the property’s rapid deterioration. If your co-owner continues to neglect their financial obligations as a co-owner, Talkov Law’s partition attorneys specialize in navigating the complexities of co-ownership disputes. The sooner a co-owner gets the partition started, the less likely it will be that a foreclosure occurs before the property is sold. Moreover, a partition action may be the only way to resolve co-owner disputes and recover contributions you have made towards the property.

As California’s #1 team for filing partition actions, Talkov Law’s partition attorneys are equipped to provide the guidance and representation you need. For a free consultation, call (844) 4-TALKOV (825568) or reach out online today.

References

References
1 Wallace v. Daley (1990) 220 Cal.App. 3d 1028, 1035.
2 Southern Adjustment Bureau, Inc. v. Nelson (1964) 230 Cal. App. 2d 539, 541.
3 Wallace v. Daley (1990) 220 Cal.App.3d 1028, 1035
About Scott Talkov

Scott Talkov is a partition lawyer in California. He founded Talkov Law Corp. after more than one decade of experience at a California real estate litigation firm, where he served as one of the firm's partners. He has been featured on ABC 7, CNN, KCBS, and KCAL-9, and in the Los Angeles Times, the Orange County Register, the San Diego Union-Tribune, the Press-Enterprise, and in Los Angeles Lawyer Magazine. Scott has been named a Super Lawyers Rising Star for 9 consecutive years. He can be reached about new matters at info@talkovlaw.com or (844) 4-TALKOV (825568). He can also be contacted directly at scott@talkovlaw.com.

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