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Lucy, Esq.
Lucy, Esq., Lawyer
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OK, I need some help for my friend who is co-tenant in common

Resolved Question:

OK, I need some help for my friend who is co-tenant in common (and) with her stepfather on a mobile home in CA, they are selling the mobile home now, they just signed the purchase agreement with a buyer.

The problem is the stepfather has a car loan that the stepdaughter is co-signer on, and this car loan keeps showing up on her credit report, so she can't qualify for a loan to buy his half of the mobile home, so they were forced to get an outside buyer through an agent he found.

She also has student loans she wants paid from the proceeds, so I told her she should just add those two items to the escrow instructions and they can take care of it.

Well the step father refuses to do that and wants a check mailed to him and he will send her half to her, plus he doesn't want to pay the car loan off in that manner either. She has asked their agent to do it, but she says it can't be done that way. Which I think is a BS story she is telling the stepdaughter.

What is your advice? I told her to stand fast and refuse to sign anymore papers until this is settled, in writing. Can she have the escrow pay these two loans off from the proceeds and send separate checks to each party for the balance owed?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Lucy, Esq. replied 1 year ago.
Hi,

My name is XXXXX XXXXX I'd be happy to answer your questions today.

There's no reason that the proceeds from the sale can't be distributed via a separate check to each party. However, what would usually happen is that there would be one check with both their names on it. They could go to the bank to cash it together, each take their share, and then do whatever they want with the proceeds. There is no logical or legal reason that she needs to agree to a check in his name only. I'll be honest - from what you've said, it sounds like, if she does that, she'll end up in court over the money. It's better to just split the money in the first place, once any liens on the mobile home are paid. The escrow company theoretically could make payments directly to her student loan, but is not likely to do it if the parties cannot agree - they don't have any legal ability to decide who should get the money, beyond the fact that both names are XXXXX XXXXX account.

Your friend unfortunately cannot force her stepfather to pay off a loan on which she is a signer. There is no law that would allow that. She signed the paperwork and agreed to be a cosigner, and one of the consequences of that is that it's going to show up on her credit report. She can only sue him if they had some agreement that he breached - for example, if he stopped making payments, or if they had agreed that he would refinance in his name only and didn't do it.

Also, the sales agreement is a legal and binding contract with the buyer. If your friend refuses to proceed with the sale, she could be sued for damages. A dispute with the other owner over how the proceeds of the sale should be split is not a legal basis for repudiating a contract. So, if the sale falls through, the buyer could get a judgment against her (which is also a black mark on her credit, and remains there for several years).

If you have any questions or concerns about what I've written, please reply so that I may address them. It's important to me that you are 100% satisfied with the service I provide. Otherwise, please rate my service positively so that I get credit for answering your question. Thank you.
Customer: replied 1 year ago.

So, It wouldn't be just "her" the buyers would sue, it would be the both of them, right? Should the sale not complete.


And the "escrow instructions", can't they both place those clauses in the instructions? If he refuses, then the sale fails and they both risk a suet, along with a missed sale opportunity.


 


I understand there is "NO Legal" way she can force him to include the loan be paid, but she can muck up the whole sale by refusing to continue signing papers. At this point in the sales, they must agree on escrow instructions, right?


 


Let me tell you some history of these two, my friend has been fighting with her stepfather for the last 10 years to sell this property and he has refused. But he has also insisted that she pay half of all the costs even though she didn't live there. She finally moved in when she turned 55yo and from that point on he has harassed her at every step, to the point where could no longer live with him. Now out of the sky blue he wants to sell, if fact its the next stage of harassment because he is insisting on using his agent and refusing to listen to her at all.


 


There is no mortgage on the place, only the parks lease, property tax & insurance. I don't understand what the guys problem is, there will be plenty of money left over after all is said and done, for both parties. He is just a shovenist pig who has no respect for women.

Expert:  Lucy, Esq. replied 1 year ago.
Yes, if the sale didn't go through, the suit would be against both of them. But he can file a countersuit asking the judge to force her to indemnify him for any damages he is ordered to pay, since she doesn't have a legal right to delay the sale based on her insistence on using the escrowed funds in a certain manner. This is because she doesn't have a legal right to do that. If the sale falls through because the father is insisting on 100% of the proceeds, he doesn't have a right to do that, either, and it's his fault.

They could agree to proceed with the sale and fight over escrow between themselves later, since, really, that has nothing to do with the buyer. They could also just agree to split the proceeds of the sale 50/50, which is the default if they are tenants in common and haven't specified different interests. If she ultimately sues him in order to get a sale approved, that's what a judge would order. What each of them chooses to do with the proceeds after the fact is up to them. The escrow company can also file a suit for what is called "interpleader." That's where the escrow company basically says, "Look, we have this money, we know it's not ours, but we can't figure out which of these people has a right to it." Then, the judge figures it out.

The history is interesting, but it's not legally relevant. There's no law that says this guy can't be a total jerk. There's no law that requires him to treat women with respect. If they wind up in court over this transaction, the judge is going to look at the contract and their behavior regarding this transaction, and the rest of it doesn't make a difference to him.
Lucy, Esq., Lawyer
Category: Real Estate Law
Satisfied Customers: 19926
Experience: JA Mentor
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