Family Dynamics - P E T I TO situation with a Duplex co-owned

Michael Morrongiello

Jun 14 • General discussion

P E T I T O situation

P = Property

Duplex located in Carmichael, CA

Only (1) ONE APN # exists for the duplex property.

One side rented for $2,300 per month, the other side is

VACANT and in need of work so that it can be rented.

E= Equity

Estimated Value $800,000 TODAY

The property is FREE & CLEAR of any debt

Property was acquired for around $200,000 many years ago; pre 2016.

T= Title

Originally was titled in the Name of a Father (now deceased) as to a 50% Interest and (1) one of his daughter (elderly daughter # 1) as to the other 50% Interest in the Duplex.She (elderly daughter # 1) lived on one side and the Father lived on the other side. She helped care for the aging Father. The Father passed away back in 2022 and his estate was probated.

The OTHER Daughter (younger 2nd Daughter) prior to his passing was given a DEED by the Father subject to his Life Estate interest; Upon the Fathers passing in 2022, Younger Daughter # 2 then became the OWNER of 50% of the Duplex property along with Elderly Daughter # 1 still owning the other 50% interest.

I= Interested Parties

Both of the daughters each now own 50% undivided interests in the Duplex property valued around $800K which is FREE & CLEAR of any debt.

Elderly Daughter # 1 has relocated but has been RENTING out her 50% portion of the duplex (for $2,300 per month) as stated above.

T= Threats

The relationship between Elderly Daughter # 1 and the Younger Daughter # 2 is contentious. They barely speak. It seems that Elderly daughter # 1 feel entitled to 100% of the DUPLEX property as she was the one who cared for their Father before he passed.The 50% SIDE of the DUPLEX now owned by the Younger Daughter # 2 cannot be readily rented because it’s in desperate need of many upgrades to get it rent ready (like a new HVAC system, some electrical work, new flooring, the updating of the bathrooms and the Kitchen, etc.). Thus younger daughter # 2 side of the duplex is NOT able to produce any income from rents; Yet she still must share in 50% of the expenses for Taxes, Insurance, etc.

She has approached the Elderly Daughter # 1 several ways:

1) To see IF she would SELL her 50% interest in the property in her

2) To see Elderly Daughter # 1 would BUY OUT Younger Daughter #2’s Interest in the property

3) To see if Elderly Daughter # would allow for Younger Daughter # 1 to BORROW funds against the property so that she could get the Side of the Duplex she owns (her 50%) renovated to be rent ready

On ALL (3) times when approached, Elderly Daughter # 1 REBUFFED any of these overtures from Younger Daughter # 2

O= Opportunities

Younger Daughter # 2 is FED UP and wants to break this “log jam” and either buyout Elderly daughter # 1’s interest or have them BOTH sell the property or be allowed to borrow against the property so that she can dial in her Side of the Duplex and get it rented. However she is NOT willing to sell her 50% interest in the property at a FIRE SALE price.We have discussed this SOLUTION; The possibility of younger Daughter # 2 SELLING her 50% interest in the property to us (as a financial friend buyer) and that have us possibly bring a PARTITION Suit against Elderly daughter # 1 to force a buyout or sale of the property.

The Younger Daughter is open to the concept but wondering

WHAT’s in it for US and WHAT is in It for Her?

Q- Thoughts on what might be a fair and equitable play or structure with her are appreciated given that IF we purchased younger Daughter #2’s 50% undivided interest in the property it would be US that would be putting up 100% of the funding for the potential THREAT of LITIGATION or LITIGATION for the Partition lawsuit.

Q- ONE MORE ISSUE are the potential TAX CONSEQUENCES for each party as the property was valued at $400,000 when the Father passed away in 2022. Thus EACH Party would have upon any sale recapture of depreciation taken and a significant long term capital gains tax due upon any sale of the property be it forced or otherwise.Assume each party could elect to do a 1031 Exchange for their respective 50% undivided interests ?

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Family Dynamics - P E T I TO situation with a Duplex co-owned