Joint Owner’s Right to Sell or Encumber Real Property

Joint Owner’s Right to Sell or Encumber Real Property

It is fundamental to joint ownership that each owner has an equal right to possess, use, and benefit from the entire property. In a previous post, we introduced such characteristics of joint ownership in the forms of joint tenancy and tenancy in common. In this post, we delve deeper into each co-owner’s separate right to sell or encumber interest in real property.

First, a co-owner can sell or encumber his or her interest in real property without getting permission from other owners. As a result, the other co-owners can suddenly find themselves owning property with a new party that was not previously on title. This can cause an array of problems. The parties may have to work out new agreements concerning how payments benefitting the property are made and how rental income is distributed among the owners.  Many times these conflicts lead to one or more parties electing to force a partition, which is a legal action that terminates the common ownership and results in the division of property interests.

Second, what a co-owner cannot do, is to encumber or convey the entire property. Buller v. Buller, 62 Cal. App. 2d 694 (1944). This is because the grantee in the transfer (the new co-owner) simply steps into the shoes of the conveying co-owner and takes the same interest that the grantor had in the property. Therefore, without getting permission from the other co-owners, one co-tenant cannot obtain a separate loan and use the entire property as security for that loan. As another example, one co-owner cannot give the neighbor an easement to access a part of the property without authorization from the other owners. Such grants are not enforceable against the other owners.

Third, there are limited circumstances when a co-owner can take action for the other co-owners without their special authorization. California courts have declared that an exception to the general rules requiring permission may apply when the co-owner “acts for the benefit of the property.” Gordon v. City Council, 188 Cal. App. 2d 680, 687 (1961). Where the co-owner protects the entire estate from injury or loss without getting permission from other co-owners, this exception can apply. For example, a co-owner can “resist an intruder, or evict a trespasser, remove a encumbrance,  or redeem a burden on the property.” Los Angeles Lighting Co. v. City of L.A., 106 Cal. 156 (1895).

Related issues can include whether a co-owner can sign a petition impacting commonly-owned property without obtaining permission from other owners. To determine whether a co-owner acted properly courts analyze whether the co-owner’s conduct creates any burden or obligation on the other co-owners or otherwise requires special authorization from the other owners based on the terms of any co-tenant agreement or a relevant statute. For example, in Los Angeles Lighting, 106 Cal. at 160–61, the court found that the city council could not disregard an individual property owner’s objection to a proposed improvement impacting his property, even if  his co-owner had not signed the objection. The court found that the statute permitting such objections did not require the objections to be made with any particular formality. Further, they did not create any burden or obligation. Therefore, it was sufficient that the objection was purported to be signed on behalf of the owners.

There can be some nuances that determine the effect of a co-owner’s actions involving the property that must be assessed on a case-by-case basis. For example, there may be situations where a co-owner obtains an easement benefitting the property that comes with an incidental obligation to keep the easement free of parked vehicles. Are the co-owners bound to such an agreement? Schorr Law is experienced in handling analyzing such disputes and in handling general disputes arising from common ownership. For help with your real estate matter and to see if you qualify for a free 30-minute consultation, contact us by phone at (310) 954-1877 or by email at info@schorr-law.com. You can also send us a message here.

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