Who owns the family house? The California Court of Appeals recently examined a lawsuit between siblings over a single family residence in Alhambra, California. The brothers and sisters each made differing claims over a home purchased by their parents, held in title by two of the siblings but for which they all contributed money towards the purchase. The lawsuit involved claims of partition and resulting trust.
1. Lawsuits between brothers and sisters
Although the Court of Appeal’s opinion is unpublished, it is a good example of litigation between brothers and sisters over property. Whether through inheritance, gifting or resulting trust, family members often end up on title to property together. Even in an income producing property where none of the family members live, siblings who are tenants-in-common often end up in lawsuits. Most often these lawsuits center around partition or resulting trust, two legal causes of action that allow the court to determine ownership of the property and force a sale or other resolution.
The lawsuit among the siblings in this Chinese family centered around three issues: (1) Whether the grant deed properly described the property’s ownership, (2) whether the court property found a resulting trust, and (3) whether the ownership interests were properly calculated.
2. Legal Title Versus Full Beneficial Title
One sister argued that the title to the property showed her as an 85% owner of the property. The trial court, however, determined her ownership share at 15.45%. On appeal the sister challenged this finding.
California Evidence Code section 662 states 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.” In other words, what the deed says as to how title is held is presumed to reflect the actual ownership interests in the property.
In this case there was no dispute that the legal title (i.e., the deed) stated that the sister owned 85% of the property. However, the trial court found that there was clear and convincing evidence which overcame the presumption that this was the intended ownership share. This evidence included the fact that she did not pay money towards the purchase, she never made a loan payment, she sent letters to her brothers and sisters in which she claimed only a one-third interest, and a history of only paying one-third of the property tax.
The Court of Appeals therefore affirmed the trial court’s finding that the sister owned just over 15% of the property and that her brothers and sisters were also co-tenants.
3. Resulting Trust Among Family Members
In determining ownership the trial court found a resulting trust and ascertained the ownership interests of each sibling. The plaintiff sister challenged the allocation of ownership.
Resulting trust is established when a transfer of real property is made to one person but the money is paid by another person. A trust is presumed to result in favor of the person by or for whom such payment is made. Its purpose is to enforce the intentions of the parties, even though they may put different names on title. The most common example of this is when one person makes the down payment and pays the mortgage but does not have sufficient credit to get a loan. Another family member will be on title and on the mortgage but, under a resulting trust, would not be considered the true owner.
In this case the trial court found there to be a resulting trust. The various siblings and their mother all contributed towards the purchase of the property. The brothers and sisters also contributed towards the mortgage payments. The trial court found that the siblings intended the legal title holders to hold beneficial title for the siblings who participated in making the down payment and paying the mortgage.
4. Ascertaining Ownership Interests
The last issue in the lawsuit among the family members was whether the trial court properly allocated each sibling’s ownership interest. The trial court suggested that it would divide the property based on each party’s percentage contribution to the down payment, mortgage and taxes for the home while also taking into account various other payments. The trial court held a hearing on the issue and made the allocation. Although the sister challenged the allocation in her appeal, the Court of Appeal found that the record submitted to the appellate court was inadequate for the court to review the challenge.
The name of the case is Hong-Chuan Lin and Shwu-Jen Lin v. Ing-Jieh Jeng, et al. and the unpublished decision was handed down by the Second Appellate District of the Court of Appeals of California.
Laine T. Wagenseller is a real estate litigation attorney in Los Angeles. He is the founder of Wagenseller Law Firm. He handles numerous partition lawsuits, including among family members. For more articles and information, please visit www.wagensellerlaw.com. Contact Mr. Wagenseller at (213) 286-0371 or firstname.lastname@example.org.