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Family Real Estate Lawsuits

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Experienced Real Estate Attorneys Can Make A Big Difference

Real estate litigation in Los Angeles is already a highly tendentious process. But when the lawsuit is between family members, the litigation process gets even more personal and acrimonious. Below are some examples of family lawsuits over real estate that we have handled with an eye towards pulling out some lessons for those headed towards or in a lawsuit with family members.

Our client is in a partition lawsuit with her step-mother over a high-end residential property in the Pacific Palisades area of Los Angeles. The father/husband left the home in his estate to both parties. The step-mom refused to sell the property and allowed non-paying tenants to live there. Although most lawsuits like this settle at some point in the process, we had to take this one all the way through the appointment of a referee and the court-ordered sale of the property. Lessons? Dads, don’t leave your property to both your child from a first marriage and your second (or third) wife. Nothing good can come of it!

We recently won a trial in which our clients were sued by two of their siblings over various apartment buildings that they owned. Sometimes large extended families pool their money. Oftentimes they don’t keep good records. Then they transfer ownership of the properties amongst themselves, often, for example, to help with immigration issues. These trials are extremely expensive because they involve years of transactions, financial records and correspondence. Nothing is ever clear and victory is never assured. Lessons? Consult with a qualified and experienced real estate attorney whenever you are attempting to do joint ventures or “family ventures”. Make sure transactions are properly documented in a well-drafted and fully enforceable contract drafted and reviewed by attorneys.

Recently a potential client called our office with her dilemma. She had been in business with her sister for thirty years. They had joint bank accounts. They owned property jointly. The potential client let her sister take care of everything. Eventually her sister’s daughter got involved and they sold the properties, cleaned out the bank accounts and claimed everything for themselves. Unfortunately this left the caller with no money with which to hire an attorney to fight them. Lessons? Don’t leave your fate in the hands of others. Take charge of your money and your investments. While it may have worked for thirty years, there came a point in time when it didn’t work.

A client of ours developed and owned a large industrial building in the early 1970s with a partner. For many years the property performed brilliantly and the partners made good money. Later, when the partners were both in their 80s, the neer-do-well out-of-work son of one of the partners took charge of his father’s investments. He teamed up with his old friend, a personal injury attorney (with no experience in real estate litigation) and filed suit against the other partner, claiming that he had been stealing from the partnership. With an unqualified but bulldog attorney, the son litigated the case heavily and without reason. Eventually another partner stepped in to buy out the plaintiff’s interest but not before the partnership and partner had incurred hundreds of thousands of dollars in attorneys’ fees. Lessons? While your trust and estate plan may make plans for your death, who will take care of your affairs and investments when you are old and unable but still alive? The plaintiff’s attorney was unqualified but that ended up driving up the cost of litigation. You are much better served by an attorney who has extensive experience in real estate law and lawsuits.

We represented an aging matriarch (85 years old) against a lawsuit by her eldest daughter (62 years old). The mother had acquired an impressive portfolio of Beverly Hills apartments and all of her children were set to inherit their equal share. Some properties were held in a partnership in which all of the siblings shared interests. However, the eldest daughter was living beyond her means and needed money. She sued her mom, claiming that she had contributed some inherited money towards the purchase of one of the apartment buildings in the early 1970s and was therefore a part owner of that particular building. She did not have any records, was not on the deed and could not produce any evidence to support her claims. But the lawsuit had to be defended and it involved extensive investigation going back decades. In the end the case settled. The daughter was bought out of the family real estate partnership and written out of the will in exchange for a payment that was pennies on the dollar of what she would have eventually inherited. Moreover, her attorney took a 40% share of the proceeds and she had big tax liabilities arising from the payment. The mother died shortly thereafter and the daughter missed out on her inheritance. Lessons? Patience is a virtue.

Our clients—two brothers—were sued by their youngest brother over two apartment buildings in which each of them owned a one-third interest. The two apartment buildings sat side by side near downtown Los Angeles. The oldest brother (one of our clients) managed the buildings and distributed payments to his brothers every month. The youngest brother lived in New Jersey and did nothing with regard to the properties except receive his monthly distribution. The buildings were inherited from their parents and so none of the siblings had been involved in purchasing the properties (i.e., investing). The youngest brother, perhaps spurred on by his wife, filed a partition lawsuit against his brothers seeking the sale of the properties. Except he did everything in his power to prevent the sales. He demanded that his brothers buy him out at an inflated price well above the properties’ appraised values. He offered to buy the brothers out but at a bargain-basement price. Rather than put the properties on the open market for sale, he demanded that he get one building and that his two brothers retain ownership of the adjacent building. The arguing went on and on for years until the attorneys were able to broker a settlement. Lessons? Pride, anger, jealousy and other emotional elements can play a huge role in family real estate lawsuits. Partition lawsuits always end up with the sale or division of the property so fighting them is usually useless.

What are the take-aways from these examples of family fighting over properties? The first is that lawsuits among siblings, parents and other family members are not governed solely by the law. Emotion can play a big role. Moreover, bad attorneys can make real estate litigation far worse than when two experienced real estate attorneys square off against each other. Good attorneys can evaluate the legal underpinnings of the case, make smart suggestions to their clients and steer the parties towards a reasonable settlement. Make sure your attorney has handled numerous family lawsuits and has the requisite real estate knowledge and experience to handle your specific lawsuit.

Laine T. Wagenseller is a Los Angeles-based real estate trial attorney with extensive experience in family lawsuits over property. He founded Wagenseller Law Firm in downtown Los Angeles to give clients individualized attention and cost-effective representation. The attorneys at Wagenseller Law Firm have represented clients in jury trials, court trials, arbitrations and mediations throughout Southern California.

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