Do I Have to Pay Rent for Occupying a Home I Inherited as a Trustee?

Full question:

my borther and I are co-trustees of 2 inherited houses: a family home in san francisco, ca and a summer home. I continue to live in the family home after my father died in 2008. I offered to purchase the san francisco home by paying him 50% of the difference in appraised value of the san francisco and country home. He refused my purchase offer and demanded that I pay him rent from my father's day of death UNTIL the settlement of the trust. He also refused to share the cost of maintenance of the san francisco property and demanded that I pay 50% fair market rent value. I refused to pay rent because he does not want to share in the mainternance. I offered to pay him the amount he wanted provided we put the country home for sale since he was not clear on his stand on whether to take title of the country home or not. He refused to put the country home on the market for sale because I have not paid him back rent. The san francisco property is in need of repair but we could not start repair because I am not the sole owner of the property. However, I paid the property taxes and insurance. If the house is to be put on the market for rent we need to address the repairs. In the meantime, the value of the properties went down because of the economic downturn. Another reason for not paying rent is that our computation shows the amount he is charging for rent is close to the monthly amortization I would be paying the bank if i buy him out. As of today, after 3 years of my father's death, the appraised value of the 2 properties is the same but lately the value of the country home is dropping. The question is: do I owe my brother rent even if he refused to share in the maintenance and hindered in the sale of the country home? Do I owe him rent even if there is no rental agreement and his demand that I pay him ren until the trust is settled and he tried to control the settlement of the trust?

• Category: Trusts
• Date: 04/07/2025
• State: California

Answer:

Courts have held that trustees breached their fiduciary responsibility of loyalty by allowing immediate family members to occupy trust property at no rent or for rent far below fair market value. A trustee has an obligation to obtain see to it that those occupying real estate owned by the trust pay fair market value for its rent.

It will be a matter of subjective determination for the court to determine whether there was a breach of fiduciary duty, based on all the facts and circumstances involved. The standards of care are measured against the subjective interpretation of how a "reasonable" person would act in similar circumstances.

The elements of a cause of action for breach of fiduciary duty are:

(1) Plaintiff and Defendant share a relationship whereby:

(a) Plaintiff reposes trust and confidence in Defendant, and

(b) Defendant undertakes such trust and assumes a duty to advise, counsel and/or
protect Plaintiff;

(2) Defendant breaches its duties to Plaintiff; and

(3) Plaintiff suffers damages.

The elements of a claim for breach of fiduciary duty are not fixed as the claim may arise from virtually any case where one party accepts the trust and assumes the duty to protect a weaker party.

Affirmative defenses to a claim for breach of fiduciary duty can include, but are not limited to:

(1) The passing of the statute of limitations for filing the claim.

(2) Lack of fiduciary relationship (for example, when the parties did not enter a fiduciary relationship, but rather conducted business in an arm’s length transaction there is no duty to protect the other party or disclose facts which the other party could have discovered by its own diligence.)

(3) Lack of standing

(4) Approval (for example, if the alleged actions followed full disclosure to and the consent of the Plaintiff)

(5) Business judgment rule (ex. that the corporate fiduciary's actions were motivated by a bona fide interest in the well being of the corporation where shareholders are the ones owed the fiduciary duty)

We are prohibited from giving legal advice, as this service provides information of a general legal nature. We suggest you consult a local attorney who can review all the facts and documents involved.