This seems complicated, but if you break down that a guarantor simply acts as collateral against a property mortgage, and those who are eligible to bring a partition action lawsuit must have an actual interest in the property, it starts to make more sense. Read on to find out more about how these two concepts interact in the world of real estate law.
What is a guarantor?
In everyday life, there are many examples of guarantors. A guarantor is someone who helps someone else get a loan, mortgage, or line of credit. A guarantor is not the same legal concept as a co-signer, although the two serve very similar purposes.
The role of a guarantor is to promise or assure another party’s loan, mortgage, or line of credit by promising to pay the debt back if the other party can not. This means that the loan company, mortgage company, or credit card company can look to you as the guarantor to pay back someone else’s financial agreement if they become insolvent or lack the financial means to repay their debts. This means that if someone’s student loans are not paid back, they will look to the guarantor of these loans. Similar to a guarantor in property, if the mortgage bill is not paid monthly, then the mortgage company would look to the guarantor to pay the rest of the mortgage payment due.
In short, a guarantor becomes the responsible party to repay a debt if the person receiving the loan can not pay it back. Guarantors allow their own personal assets to be used as collateral against the loan in question.
What is a guarantor in a property?
A guarantor in property uses their own assets as collateral to ensure a mortgage note is able to pay for until it is paid off. The guarantor in a property assumes financial responsibility in the event that the homeowner can not pay their mortgage bill.
However, a guarantor in property does not have the same rights as a co-signor. This is because the guarantor’s name is only on the mortgage and not on the title of the property. If you have your name or interest represented in the title to the property or the property’s deed, then you have rights to the property, such as the right to enjoy the property in question.
A guarantor mortgage allows a close family member to act as a “guarantor” on the debt of the mortgage. Using those property owners who use a guarantor are first-time homebuyers or do not have enough credit or a big enough cash deposit to sign the mortgage agreement themselves.
A guarantor does not need to pay anything as long as the homeowner (s) pay their mortgage monthly repayments on time. If the guarantor’s savings are tied up into the mortgage agreement, then the funds will be released based on the guarantor once the arrangement is no longer necessary.
What is a partition action?
A partition action lawsuit is when a co-owner or co-tenant of a piece of real estate property wishes to sell the property, but the other co-owners do not wish to relinquish their ownership rights to the property.
The partition lawsuit forces the sale of the property in court with the goal of being equal and equitable to all parties. There are several different avenues of how a partition action lawsuit can be decided, but one of the ways that partition actions are decided is each party’s interest in the property and the equitable amount of the property’s sale price owed to each co-owner or co-tenant.
How can you sue for a partition action?
California Code of Civil Procedure Code section 872.210 states that any person that wishes to dissolve ownership that is jointly owned with another person has a legal right to sell his or her’s interest if they wish. Folks that have eligibility or standing to either start a partition lawsuit or counter a partition lawsuit are people who inherit the property in question, mutual properties owned by spouses who then divorced or separated, or invested ownership partners.
There are two exceptions to the rule of who can join or counter a partition action lawsuit, and those include those who waived the right partition within a contract or in writing and those who own property via a community property state by a married couple, as this partition lawsuit must be joined, countered, or started after a divorce is finalized in family court.
What about a guarantor to the property and partition lawsuit?
There are adverse implications from the mortgage companies’ perspective. While there is a mortgage existing in place for real property, then there is a lien that exists on the entire piece of property. After a partition lawsuit, the shares of the property between all the co-tenants or co-property owners may look different. It may exist so differently that the property is divided physically or ownership percentage-wise that it is drastically different than what was originally written in the montage agreement.
As the downsides for a lender faced with the property being subject to a partition lawsuit are clear-cut, it is very common for mortgage companies to require that co-tenant borrowers waive their right to partition for the term of the loan. This is called an “affirmative” defense to a partition lawsuit or defense so absolute in the eyes of the court that it would keep the waiver’s terms of no partition over a co-tenant or property owner’s “right” to partition.
How can Underwood Law Firm, P.C. assist you?
Both partition actions and guarantor issues can become very complex under both California Real Estate law and California Civil Procedure. To ensure that you are keeping all of your legal actions and benefits open for your property, it is best to consult with a knowledgeable lawyer with demonstrated success in these types of lawsuits before, such as the ones at Underwood Law Firm, P.C.
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