Unequal Down Payments and Ownership Interests in Property Co-Ownership Disputes (Partition Actions)

One of the most common issues that arises in California real estate co-ownership disputes and related partition actions is the remedy for a party who pays more than their fractional share of the down payment.

For example, perhaps Sally and Joe purchase a home together, with Sally paying $100,000 of the down payment, while Joe pays $50,000 of the down payment. Does this mean that Sally owns 2/3rds of the house, and Joe owns 1/3rd of the house? As explained below, the law provides authority that Sally may be a 2/3rds owner in certain situations, while Sally may be a 1/2 owner entitled to reimbursement for her unequal down payment in other situations.

Does a Down Payment Reflect Ownership Percentages of a Partitioned Property?

Some authority suggests that a co-owner who pays more than their proportionate interest in acquisition holds an interest equivalent to their payment.

Miller & Starr, the leading treatise on California real estate, explains that: “As is the case with joint tenancy, a tenancy in common can exist in any interest in property, but contrary to the requirement in joint tenancy, the interests of cotenants need not be equalEach tenant in common can own an interest in the property proportionate to his or her unequal contribution to the costs of acquisition.” [1]Creation and characteristics, 4 Cal. Real Est. (Miller & Starr, 4th ed.) § 11:34 (citing Schuyler v. Broughton (1886) 70 Cal. 282, 284; Estate of England (1991) 233 Cal.App. 3d 1, 4; Rupp v. … Continue reading

While it is true that: “When two or more persons take as tenants in common under an instrument silent as to their respective shares, a presumption arises their shares are equal” (Yeoman v. Sawyer (1950) 99 Cal. App. 2d 43, 46), this rule is overcome by evidence of unequal down payments under California law. Schuyler v. Broughton (1886) 70 Cal. 282, 283 (“the legal presumption which arises from the face of the deed may be overcome by extrinsic proof that the consideration paid was the separate funds of the wife”); Donnelly v. Wetzel (1918) 37 Cal.App. 741, 742 (proceeds of partition sale ordered divided “in the proportion of one–third to her and two–thirds to him” based on unequal down payments”); Cosler v. Norwood (1950) 97 Cal.App.2d 665, 666 (The trial court decreed that plaintiff owned a one-fourth interest in the real property and that defendant owned a three-fourths interest based on their proportional unequal payments toward the purchase of the property); Demetris v. Demetris (1954) 125 Cal.App.2d 440, 444 (partition and deed reformation based on unequal down payments).

Unequal Payments in a Joint Tenancy

While the unequal contributions may change ownership percentages in tenants in common, “Joint tenants hold their interests in the property in equal shares.” [2]Common law and statutory requisites of creation—Unity of interest, 4 Cal. Real Est. (Miller & Starr, 4th ed.) § 11:25. Miller & Starr explains that: “A joint tenancy in … Continue reading

Indeed, California Civil Code 683(a) makes clear that: “A joint interest is one owned by two or more persons in equal shares…” [3]The full quote is that “A joint interest is one owned by two or more persons in equal shares, by a title created by a single will or transfer, when expressly declared in the will or transfer to … Continue reading

As one court explained: “One of the characteristics of joint tenancy is the equality of the interest held by the respective tenants,” citing “Civ. Code § 683.” [4]Stark v. Coker (1942) 20 Cal. 2d 839, 844

Unequal Payments in a Tenancy in Common

For example, one court held that, “as the parties held the property here in question as tenants in common, and as it is conceded that each party contributed equally to the acquisition thereof, upon the death of decedent,” the heir inherited an “undivided one-half interest standing in his name….” [5]Yeoman v. Sawyer (1950) 99 Cal. App. 2d 43, 46

Indeed: “When two or more persons take as tenants in common under an instrument silent as to their respective shares, a presumption arises their shares are equal.” [6]Caito v. United California Bank (1978) 20 Cal. 3d 694, 705

This is important since Summers v. Superior Court (2018) 24 Cal. App. 5th 138, 143 “conclude[d] that the trial court lacked the authority to order the sale of the property before it determined the parties’ respective ownership interests.”

However, parties can show that the property where the deed provides for joint tenancy or tenancy in common, or shows a differing ownership should be treated in another manner. Indeed, under Code of Civil Procedure § 872.810, the proceeds of sale are divided according to the interests of the parties. However, to do this, they must meet the standard under California Evidence Code 662: “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.”

Kershman Formula

In Kershman v. Kershman (1961) 192 Cal.App.2d 23, 27, “testimony amply support[ed] the implied finding that the plaintiff and defendant had agreed that their interests were not to be equal until defendant had paid his share, and that their interests were to represent at any given point of time the contemporaneous proportion of their respective contributions in relation to the total.”

Describing this case as having laid down the “Kershman formula,” another court found that “[m]any cases have held that where cotenants unequally contribute to the purchase price of real property, that a presumption arises that the cotenants intended to share in proportion to the amount contributed by each to the purchase price.” Sack v. Tomlin (1994) 110 Nev. 204, 210 (citing Kershman and Millian). A California court described this remedy from Kershman as a method to “determine the ownership interests in the property in proportion to the amounts contributed.” Milian v. De Leon (1986) 181 Cal.App.3d 1185, 1196.

Sack explained that: “In Kershman, the court described its approach to situations where cotenants contribute unequally to the purchase price of real property: ‘The proper approach would be to first determine the respective ownership interests of the parties whether equal or otherwise. Upon sale of the property there should be a determination of the share of each in the net proceeds according to those interests. Then any claims that one party may have against the other should be deducted from the share of the party to be charged and that of the other party should be increased accordingly.’” Sack v. Tomlin (1994) 110 Nev. 204, 211.

Remedy for a Co-Owner Who Paid More than Their Share of the Down Payment

Even if a co-owner is found to be unable to change the ownership percentages from that found in the deed to reflect the unequal down payments, they still have another remedy in the accounting of the proceeds of sale in a California partition action. As the California Court of Appeal in Milian v. De Leon explained, “upon partition a cotenant who has paid a disproportionate portion of the purchase price is entitled to reimbursement of the portion disproportionately paid.” [7]Milian v. De Leon (1986) 181 Cal.App. 3d 1185, 1195 (citing Demetris v. Demetris (1954) 125 Cal.App.2d 440 and Donnelly v. Wetzel (1918) 37 Cal.App. 741).

Milian v. De Leon continued that, as to the cases cited by the court, “neither case holds or indicates that rule is applicable in a case involving true joint tenants. Nor indeed have we discovered a single case in which a true joint tenancy was found and yet an accounting and contribution was ordered because of disproportionate contributions by the parties to the original purchase price.”

Milian v. De Leon thus applied the rule that: “Where one cotenant has paid more than his proportion of the purchase price of the land, he is entitled on partition to an accounting therefor.” [8]Demetris v. Demetris (1954) 125 Cal.App.2d 440, 445; accord Finney v. Gomez (2003) 111 Cal.App.4th 527, 539, n. 36 (quoting Demetris).

Accordingly, co-owners who paid more than their fair share of a down payment can recover that payment in the second phase of a partition where an accounting is conducted as to the proceeds of the property sold in a partition by sale.

As partition lawyers, co-owners in the midst of a partition action often ask us how they can recover their fair share of an unequal down payment on a partitioned property. While some co-owners argue that the down payment should reflect the ownership percentages in the property contrary to the deed, the default rule is that they are equal owners.

Talkov Law's Partition Attorneys Can Help

If you want to end your co-ownership relationship, but your co-owner won’t agree, a partition action is your only option. With seven, full time partition lawyers, Talkov Law is the #1 partition law firm in California and has handled over 300 partition actions throughout California. Every case has resulted in a sale to either a third party or one of the co-owners. Not a single court has denied our clients the right to partition or declared our client to be a non-owner. Plus, for qualified cases, there is no fee until we settle or win your case!

If you're looking to end your co-ownership dispute, contact California's premier partition action law firm by calling Talkov Law at (844) 4-TALKOV (825568) or sending us a message today.

References

References
1 Creation and characteristics, 4 Cal. Real Est. (Miller & Starr, 4th ed.) § 11:34 (citing Schuyler v. Broughton (1886) 70 Cal. 282, 284; Estate of England (1991) 233 Cal.App. 3d 1, 4; Rupp v. Kahn (1966) 246 Cal.App. 2d 188, 196; Yeoman v. Sawyer (1950) 99 Cal. App. 2d 43, 46.)
2 Common law and statutory requisites of creation—Unity of interest, 4 Cal. Real Est. (Miller & Starr, 4th ed.) § 11:25. Miller & Starr explains that: “A joint tenancy in real property consists of an estate owned jointly in undivided equal shares by two or more persons. The ownership interest of joint tenants is regarded by law as constituting a fictitious unity. Each joint tenant is vested with title to an undivided equal share of the joint tenancy property, but this interest, being undivided, runs to the entire property.” Characteristics; creation, 4 Cal. Real Est. (Miller & Starr, 4th ed.) § 11:21 (citations omitted).
3 The full quote is that “A joint interest is one owned by two or more persons in equal shares, by a title created by a single will or transfer, when expressly declared in the will or transfer to be a joint tenancy, or by transfer from a sole owner to himself or herself and others, or from tenants in common or joint tenants to themselves or some of them, or to themselves or any of them and others, or from spouses, when holding title as community property or otherwise to themselves or to themselves and others or to one of them and to another or others, when expressly declared in the transfer to be a joint tenancy, or when granted or devised to executors or trustees as joint tenants. A joint tenancy in personal property may be created by a written transfer, instrument, or agreement.” Cal. Civ. Code § 683(a)
4 Stark v. Coker (1942) 20 Cal. 2d 839, 844
5 Yeoman v. Sawyer (1950) 99 Cal. App. 2d 43, 46
6 Caito v. United California Bank (1978) 20 Cal. 3d 694, 705
7 Milian v. De Leon (1986) 181 Cal.App. 3d 1185, 1195 (citing Demetris v. Demetris (1954) 125 Cal.App.2d 440 and Donnelly v. Wetzel (1918) 37 Cal.App. 741).
8 Demetris v. Demetris (1954) 125 Cal.App.2d 440, 445; accord Finney v. Gomez (2003) 111 Cal.App.4th 527, 539, n. 36 (quoting Demetris).
Avatar photo
About Talkov Law Partition Attorneys

The partition attorneys at Talkov Law end co-ownership disputes by representing co-owners in real estate partition actions throughout the State of California.

Talkov Law is Rated 5 out of 5 stars based on 38 customer reviews.

Contact Us Today for a Free Consultation & Pay No Retainer

Call Talkov Law to discuss having your legal fees paid from the proceeds of sale of your property and no money down







      Awards and Recognition

      US News and World Report Scott Talkov

      We Have Been Featured On:

      The Real Deal

      The information on this site, including the Talkov Law Blog, is intended for general information purposes only. By using this site, you agree that any information contained in the site does not constitute legal, financial or any other form of professional advice. Information on this site may be changed without notice and is not guaranteed to be complete, accurate, correct or up-to-date.