What's the Deal?

I recently handled a real estate case which I characterized as "an effort to turn an American dream into a living nightmare."

A young family wanted to buy a house in 1996. However, they were not able to qualify for the loan on their own. Their real estate agent told them that she had a "cousin" who would co-sign the loan for them to help them out, but that he wouldn't acquire any rights or interest in the house. He would receive a nominal fee for his services. And of course she would get her commission.

What the real estate agent didn't mention to them was that the third party was not her cousin; that this stranger would actually be placed on title as a co-owner of their family home; and that co-owners can force the sale of a property without the consent of the other owners.

After contributing nothing towards the down payment, any mortgage payments, property taxes, insurance or repairs for almost ten years, this third party filed a lawsuit to force the sale of the property and to seek his share as a one-third owner.

I took this gentleman's deposition last year. I asked him why he didn't make any payments on the property whatsoever over the past decade. He said “it wasn't part of the deal.” So I followed up with a seemingly innocuous, but potentially devastating, question: What was the deal? He said that my clients were to pay him $10,000 for his agreement to sign onto the loan many years ago. Asking him if and when he demanded payment, he said he had demanded payment in 1997, and that they failed to pay him. So, now he wanted to enforce his rights as a co-owner.

Not so fast. This claimant's deposition testimony undermined his own case. At best, his claim was for breach of an oral contract for $10,000, for which the statute of limitations had long since run. We got the interloper off the title and had the real estate agent and her broker pay for us to clean up the mess.