My friend asked me to qualify for a real estate loan for them a few years ago because they were unable to do so. The plan was to have them purchase/refinance from me in two years when the value had gone up and there would be some equity in the property. We’re both on title, but only my friend is on the loan and now they want off. What can we do?

Unfortunately, unexpected repercussions for this type of situation are very common right now. Many people had a third party qualify for a purchase loan on their behalf in order to “buy” a property for their benefit. Since property values have gone done, the friend with the good credit is now on the hook for this loan because it can be near impossible to receive a loan to purchase the property from them. Even worse, many times, the “friend” stops making payments because the property value has dropped, or because they’re having financial problems themselves. There are a few different options in this situation:

1. Draw up an agreement between yourself and your friend indicating how and who will make mortgage payments. You don’t want your credit affected anymore than it has been. You want to allocate who will receive what percentage of any increase in value, and who will be responsible for a potential loss as well.

2. Agree to sell the property now and determine who will end up paying a deficiency judgment if there is one and/or who will pay any potential tax consequences for a short sale, if the property has lost value.

3. Make sure that title is held the way you want; you want the loan holder on title for their protection if you’ve altered that since loan origination.

For a complicated real estate situation such as this one, contact a real estate attorney to go over the points that should be included in the contract. You may realize that if that happened in the first place, you wouldn’t have to deal with this unfortunate situation and circumstance now.

If you were a condo owner in a community governed by a homeowners association (HOA) and your condo was sold at a foreclosure auction, you might think you’re off the hook for any delinquent payments to your HOA. Unfortunately, the fact that the bank, your lender, did go through with a foreclosure doesn’t necessarily mean your HOA received the delinquent association dues through the sale.

Today, as the market value for many properties has fallen, there often isn’t enough money “left over” to pay your HOA. Most associations have governing documents that allow them to collect from a property owner personally, after the home has been lost to a foreclosure.

Bottom line – don’t just ignore your association fees because you’re in active foreclosure. You could pay for it later.

First, you should review your deed to see if your neighbor’s property has an easement, or a legally recorded right to use your property for some reason. Many times, an easement might be recorded and included in your deed to allow neighbors to use part of your driveway to access their property, allow the public access to cross through, or even more frequently, allow utilities companies like PG&E the right to check meters.

If your neighbor has been using your property and there is no recorded easement, it is called a prescriptive easement. This means that your neighbor’s use of your property is without your permission. In California, in order to acquire legal title to the property, the neighbor would have to not only use that portion of the property for five years, but also pay property taxes on this portion of the property. However, you must be careful if you wish to just block their access by putting up a fence.

Assuming your neighbor is using part of your property without your permission, you should assert your rights. Before you do so, it is important to review your deed to determine what rights they may have, and than review the circumstances regarding the use. If you would like to discuss whether an easement has been created by your neighbors’ use, contact attorney Elena Rivkin Franz at (408) 369-0800.

If you owe a contractor money, and a lien has been recorded on your property, you can remove the lien by settling with the contractor. However, make sure that you receive a lien release in exchange for your payment. The mechanics lien release must actually be recorded on your property to nullify the lien.

What can you do if a contractor records a mechanics lien on your property to recover payment for labor and/or materials which you do not really owe? Let’s say the contractor you hired to remodel your house did not complete the work, or performed the work in a substandard manner. To make matters worse, the contractor has encumbered your property by recording a mechanics lien. Another common scenario is that you have paid the general contractor, but he/she has not paid a subcontractor or supplier on time, and the subcontractor or supplier has filed the lien. First, check to see that the contractor is licensed. An unlicensed contractor is not entitled to be paid, or to place a lien on your house.

One way to remove a mechanics lien is to file with the court, in the county where your property is located, a “Petition to Remove Mechanics’ Lien.” There are very specific procedural requirements which a contractor must follow to enforce a mechanics lien once it is recorded. One of those requirements is that the contractor must foreclose on the mechanics lien within 90 days after it is recorded. If the contractor does not foreclose on the mechanics lien, the lien becomes void. However, it will still remain as a cloud on the title to your property, which shows up in title searches and affects financing and sale of your property. Therefore you will want it removed and you may petition the court to remove it if the contractor will not voluntarily remove it.

Prior to filing the petition, you must send the contractor a letter, by certified mail, return receipt requested, demanding execution of a lien release. Should the contractor fail to execute a lien release, you may file a verified petition, requesting that the court remove the mechanics lien.

After the petition is properly served on the contractor, you will have a hearing before a judge, which will ordinarily be set within 30 days of filing the petition.

Since you must allege several specific facts in your petition, you may wish to retain an attorney to handle the petition process for you. If you retain an attorney to file the petition for you, attorney fees of up to $2,000.00 are recoverable by the prevailing party.

If you’re considering buying a place with your boyfriend, girlfriend or significant other, you can take advantage of the great real estate deals that out there right now.  You might fall in love with a great house, but as sometimes happens, fall out of love with your honey.  Many couples don’t think ahead to this unfortunate outcome and are forced to sort out what they’re going to do with their house down the line.  If you’re married, there are plenty of California laws out there that will help protect you.  If you’re not, you won’t be so lucky.

In the event you’re ready to take the plunge, consider an agreement to document who is responsible for what and what you’ll do with the house if you split up.  Important things to consider are who will pay for things like the mortgage, property taxes, insurance and maintenance.  More importantly, you should consider how you can realistically afford to sell or maintain the property in the event you do split up.   Allowing for concrete time frames to secure new financing and allocating responsibility for who will take care of the payments when the house is still in both your names are the big issues.

If you’re looking to make a big purchase like this with someone, consider drafting an agreement to protect yourselves now and down the line.

If you would like to speak to one of our attorneys specializing in this area of law, please call us at 408-369-0800 or click on “contact” to send us an email message. We look forward to hearing from you.