It has been well established that co-owners do not forfeit co-ownership rights if they have moved out of a jointly owned property. However, issues can still arise quickly in a partition action when a co-owner in possession (the co-owner who resides at or primarily manages a property) feels that the co-owner out of possession (the co-owner of a property who resides elsewhere) is disproportionately benefitting from their portion of ownership in the property.
A common example is when a tenant-in-possession pays for all repairs and maintenance on a jointly owned property but the tenant out of possession believes that they should receive their percentage of the rental value of the property. This often arises when the last surviving parent leaves the family home to each of the siblings equally, but the sibling who cared for the parent before they passed decides to stay at the house without any paying rental value to the other siblings. Indeed, had the property been rented out, all co-owners would generally share in the rental income based on their percentage interest in the property.
The dedicated partition attorneys at Talkov Law have experience achieving the best result when issues arise over the rental value claimed against tenants-in-possession.
Can a co-owner out of possession collect rental value or mortgage payments from the tenant in possession of co-owned property?
California Code of Civil Procedure 872.140 states that “The court may, in all cases, order allowance, accounting, contribution, or other compensatory adjustment among the parties according to the principles of equity.” Issues can arise quickly when co-owners in the midst of a partition action disagree on reimbursements for improvements to the property, the rental value, mortgage payments, and other costs associated with the upkeep or maintenance of the property.
Generally, “[t]he rule is that when one tenant in common has paid a debt or obligation for the benefit of the joint property . . . he is entitled as a matter of right to have his cotenant, who has received the benefit of it, refund to him his proportionate share of the amount paid.” Conley v. Sharpe, (1943) 58 Cal. App. 2d 145, 155–56. However, with the exception of an ouster, “a cotenant out of possession has no right to recover the rental value of the property from a cotenant in possession.” Estate of Hughes v. Ben G. Patton, (1992) 5 Cal.App.4th 1607, 1611.
“While we are in accord with defendant as to the settled rule that, in the absence of agreement between them, one tenant cannot maintain an action against his cotenant in exclusive possession to recover rent for the latter’s occupancy of the property . . . The later cases amply show that when, in a suit for partition or a sale for division, or other proceeding between cotenants in equity or in which equitable powers may be exerted, a cotenant who has been in possession or use of the premises seeks to obtain contribution respecting improvements made, or amounts expended in protection or preservation of the property, the court, as incidental to the granting of such relief and by way of adjusting the rights of the parties, may charge the claimant, defensively, with at least a part of the reasonable value of his occupancy or use, and in some cases may hold him accountable for profits realized from the premises, even though he could not otherwise be required to account or be held liable respecting any of such benefits.” Hunter v. Schultz (1966) 240 Cal.App. 2d 24, 30–31; accord In re Fazzio, 180 B.R. 263, 269 (Bankr. E.D. Cal. 1995) (quoting Hunter v. Schultz (1966) 240 Cal.App. 2d 24, 30–31).
Indeed, the Court of Appeal has stated the general rule is that “a cotenant out of possession has no right against another in exclusive possession of the premises to recover a share of the profits derived from the common property by reason of the labor and expenditure of the cotenant in possession . . .” Teixeira v. Verissimo, (1966) 239 Cal. App. 2d 147, 155.
Rental Value Can Be Claimed Defensively
Hunter suggests that a tenant out of possession may only receive rental value defensively to reduce the offset against them to zero, meaning they can avoid paying maintenance or repair costs to the tenant in possession. In other words, the finding in Schultz would not allow the tenant out of possession to recover such rent, but would allow them to avoid paying the tenant in possession. This also means that a co-owner in possession attempting to offensively claim offsets owed to them by the co-owner out of possession will likely not be able to do so.
Indeed: “In a partition action, ‘the court can offset the rental value against the claim by the cotenant in possession for amounts advanced for interest, taxes, and insurance premiums before distribution of the sale proceeds.’” Siron v. Valdez (Cal. Ct. App., Dec. 11, 2006, No. B186158) 2006 WL 3579709, at *4
For example, we commonly see situations in which a tenant in possession pays for everything – all maintenance, repair, improvements, mortgage, taxes, and other costs associated with the jointly owned property. The tenant out of possession then believes they are entitled to thousands of dollars in rental value from the tenant in possession. Schultz suggests that the tenant in possession cannot offensively demand money owed by the tenant out of possession, including mortgage payments, repairs, etc. The tenant out of possession, however, may defensively argue to get the rental value offset to $0, meaning that they do not owe their co-owner, the tenant in possession, anything.
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||Conley v. Sharpe, (1943) 58 Cal. App. 2d 145, 155–56.|
|↑2||Estate of Hughes v. Ben G. Patton, (1992) 5 Cal.App.4th 1607, 1611.|
|↑3||Hunter v. Schultz (1966) 240 Cal.App. 2d 24, 30–31; accord In re Fazzio, 180 B.R. 263, 269 (Bankr. E.D. Cal. 1995) (quoting Hunter v. Schultz (1966) 240 Cal.App. 2d 24, 30–31).|
|↑4||Teixeira v. Verissimo, (1966) 239 Cal. App. 2d 147, 155.|
|↑5||Siron v. Valdez (Cal. Ct. App., Dec. 11, 2006, No. B186158) 2006 WL 3579709, at *4|