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:
- State: California
Answer:
Courts have determined that trustees can breach their fiduciary duty by allowing family members to occupy trust property without paying fair market rent. A trustee must ensure that anyone living in trust-owned real estate pays appropriate rent. Whether there has been a breach of fiduciary duty will depend on the specific facts and circumstances of your case, evaluated against what a reasonable person would do in similar situations.
The elements required to establish a breach of fiduciary duty include: (1) A relationship where one party trusts the other, and the other party agrees to protect that trust; (2) A breach of that duty by the trustee; and (3) Damages suffered by the party who trusted the trustee.
Defenses against a breach of fiduciary duty claim may include: (1) Expiration of the statute of limitations; (2) Lack of a fiduciary relationship; (3) Lack of standing; (4) Approval from the party who claims harm after full disclosure; or (5) Business judgment rule, where the trustee acted in good faith for the corporation's benefit.
We cannot provide legal advice, so it is advisable to consult a local attorney who can review your specific situation and documents.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.