“My sister and I decided to buy some investment property together. My credit was lousy, so I gave her my one-half share of the money to buy it, and she put it in her name. Now that escrow has closed, I’ve asked her to put the property in both of our names, since I can’t sign the deed for her. All of a sudden it was like she became a totally different person, and she says, ‘No way, get your own property. This is my puppy.’ Can she do this?”
Well, people can do whatever they want. The question is whether she’ll get away with it. When it comes to the law, the question is: what’s the best way for you to get what’s yours? What do you sue for when someone accepts your money, takes title to property, promises to give it to you, and then reneges on the promise? In other words, to put it in a legal way: what is your remedy?
It’s called a Resulting Trust. In this example, the sister has taken title to property, a portion of which is not hers. She is therefore holding it in trust for you, and becomes what is then called a trustee. Once a court determines that the sister is the trustee, then, after you file all the right paperwork with the court, the court will order the sister to give you half. At that point, you can decide whether you still want to be on title with your estranged sibling or not. I think we all know the answer to that question.
“OK, but what actually happened was that my sister and I took title to the property together as joint tenants, but I’m the only one who paid for it. Can I get her off the property?”
It’s a little odd that the sister is on there when she wasn’t supposed to be, but people do strange things all the time. If you can convince the court that the sister shouldn’t be there because you and she never agreed to that, then the court will declare the portion she holds as a Resulting Trust, and will order her to deed her half to you. That’s case law . . . from 1962.
“So, what do I do about my son? My wife and I wanted a second property, but couldn’t qualify for a second loan. My son, though, could, because he could get a GI loan. We put in the down payment, he got the loan, and the house went into his name. Now he says the house is his, and he won’t give it to us. He said he wants to live in it. He wants to sell it. We clearly never intended this.”
Your parenting skills aside (ahem), your fix here is to sue him for a Resulting Trust. You provided the money, and you did not intend to give him this. He knew it was supposed to go to you. Ask him to give it to you; if he says no, sue him. Zella Johnson sued her son, Houston Johnson, to get title to property in her son’s name in 1987 for a house near Burbank, California, and won, in 1987. The court said it was a Resulting Trust.
“I’m comfortable with that. But what if I didn’t actually give any money? What if I just found the property? This is the situation: My now ex-partner and I had talked about investing in property together, so I started to look for something. We talked about how it had to have a stream or other water, some hills, some flats, you know, something with some variety. So I spent a whole bunch of time and effort in trying to find a particular piece of property. When I found it, I called my partner, and told him where it was. It started to rain, and washed out the road; I couldn’t get down the hill to make the purchase. He knew we’d buy it together, but when I finally got out of there, I discovered he’d bought it for himself, and all my efforts were for nothing. I mean, I didn’t put in any money, so what right do I have to sue?”
You’re in luck. This year (2010) is the the 104th anniversary of a gold-mine case that said if you make the effort to find the property, then you don’t have to pay any money to have a claim for a Resulting Trust. Your effort, at least back in 1906, would have been enough to get you on title with your partner. One question: how long ago did this happen?
“How long ago? Well, my partner put himself on title about five years ago. I haven’t done anything about it since I thought I was just out of luck. I haven’t said anything to him about it, though. We just went our separate ways. Why, is there a certain amount of time I have to sue him? Is it too late?”
If you’ve done nothing about it, then you might be in luck. But if five years ago you told him to give it back to you and he didn’t, then it’s too late to file your lawsuit. But if you just dropped it, and you make the demand to be on title now, then you might be okay. You have four (4) years from the time “the breach of trust occurs”. Usually the breach of occurs when you make the demand, and the other party refuses. If you file a lawsuit now, you can be sure your ex-partner’s lawyer will argue that you’re too late.
Resulting Trusts are somewhat peculiar, and not common. However, if you ever find yourself in a situation where you’ve paid for property that someone else took title to, it’s an efficient way to get back what may be legally yours.