Real Estate Law Tidbit – Real Estate Co-Ownership Does Not By Itself Create A Partnership in California
“Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property, or part ownership does not by itself establish a partnership, even if the co-owners share profits made by the use of the property” [See Cal. Corp. Code § 16202(c)(1)] has been well-settled under California law. Additionally: “A person who receives a share of the profits of a business is presumed to be a partner in the business, unless the profits were received for any of the following reasons: (C) In payment of rent.” [See Cal. Corp. Code § 16202(c)(3)(C)]. As such, California’s Uniform Partnership Act require an additional element beyond basic co-ownership to confirm a partnership among two co-tenants. Moreover, co-ownership alone fails to establish a joint venture unless the following three items are confirmed:
- Each member has joint control over the venture (even though they may delegate it)
- Each member shares in the profits of the undertaking
- Each member has an ownership interest in the enterprise [See Scottsdale Ins. Co v. Essex Ins. Co., (2002) 98 Cal. App. 4th 86, 91]
Are you a co-owner or co-tenant in real property with questions or concerns about your rights? I urge you to contact one of our Los Angeles Real Estate Attorneys for a free consultation and case evaluation TODAY.