When Your Co-Owner Is Lying About Your Florida Property

In this article, we’ll cover:

• Co-owner hiding rental income
• Misrepresenting property value
• Blocking or refusing a sale
• Secretly encumbering the property
• What you can do about it

When two or more people co-own real estate in Florida, the law assumes a basic level of good faith between them. Co-owners are expected to deal honestly with each other about the property, its income, its value, and any obligations against it. Unfortunately, that does not always happen. A co-owner who stands to gain financially has every reason to bend the truth, and in a jointly owned property, the opportunities to do so are plentiful.

If you suspect a co-owner is lying to you about property you share, you are not without options. Florida law provides legal remedies for co-owners who have been deceived, and an experienced real estate attorney can help you identify what is happening and what can be done about it.

Co-Owner Hiding Rental Income

One of the most common forms of deception in jointly owned property involves rental income. If one co-owner is managing the property and collecting rent, the other co-owner has a legal right to their share of that income. Under Florida law, co-owners who hold property as tenants in common or joint tenants have equal rights to possession and to any income the property generates.

When a managing co-owner pockets rent payments, underreports what tenants are paying, or routes rental income through a separate account without accounting for it, that is not just a breach of trust. It is a violation of the co-owner’s legal duties.

Some common examples of how this plays out include:

• A co-owner collects monthly rent and reports a lower amount than what tenants are actually paying
• A co-owner enters into informal cash rental arrangements that are never disclosed
• A co-owner uses rental income to pay personal expenses and claims the property is operating at a loss
• A co-owner refuses to produce leases, bank statements, or any accounting of rental activity

In these situations, the co-owner who is harmed may have a claim for an accounting, which is a legal demand that the managing co-owner produce a full record of all income and expenses associated with the property. If wrongdoing is found, the court can order repayment of the co-owner’s share of any misappropriated income.

Misrepresenting Property Value

Property value can become an issue between owners when one party wants to buy out the other, when a sale is being discussed, or when a partition action is filed. A co-owner who stands to benefit from a low valuation has a financial incentive to understate what the property is worth. A co-owner who wants to force a buyout at an inflated price has the opposite incentive.

Misrepresentation of property value can take several forms:

• Presenting a hand-picked appraisal that does not reflect true market conditions
• Concealing recent improvements that increase value, or exaggerating deferred maintenance that reduces it
• Failing to disclose a pending sale, lease, or development interest that would affect the property’s worth
• Providing false comparable sales to support an artificially low or high number

Florida courts have the authority to order an independent appraisal in partition proceedings, which is one reason why filing a partition lawsuit can be a powerful tool when an owner is gaming the valuation process. An independent court-appointed appraiser is not beholden to either party.

If an owner’s misrepresentation of value caused you to accept a buyout for less than your interest was worth, you may have a fraud claim in addition to any partition or accounting remedy.

Blocking or Refusing a Sale

In Florida, no owner can be forced to remain an owner indefinitely against their will. The law gives every owner the right to seek a partition, which is the legal process for dividing or selling jointly owned real estate. What the law does not protect against is a co-owner who uses delay, obstruction, or misrepresentation to prevent a sale from moving forward.

Common tactics used to block a sale include:

• Refusing to sign a listing agreement or purchase contract without justification
• Sabotaging showings by being uncooperative or making the property unavailable
• Making false claims about the property’s condition to drive away buyers
• Misrepresenting to a buyer that the property is not for sale or that the co-owner’s consent is not required
• Claiming a right of first refusal that does not exist in the chain of title

When a owner refuses to cooperate with a sale, the remedy is typically a partition lawsuit. Florida Statute 64.031 gives any co-owner the right to bring a partition action, and the court can order the property sold and the proceeds divided, regardless of whether the other co-owner agrees. An owner who actively interferes with a court-ordered sale can be held in contempt.

Read: Florida Partition Lawsuit

Secretly Encumbering the Property

Perhaps the most damaging form of co-owner deception is when one party takes out a loan, files a lien, or otherwise encumbers jointly owned property without the knowledge or consent of the other co-owner. In Florida, a co-owner generally cannot mortgage or encumber the entire property without all co-owners joining in the transaction. However, a co-owner can encumber their own undivided interest, which can create significant problems for the other co-owner when the time comes to sell or refinance.

Situations that arise in these disputes include:

• A co-owner takes out a home equity line of credit against their interest without telling the other owner
• A co-owner allows a judgment lien to attach to the property by failing to satisfy a personal debt
• A co-owner grants an easement or other encumbrance that affects the property’s use or value
• A co-owner enters into a lease that binds the property for years without the other owner’s knowledge

These encumbrances do not disappear when the property is sold. A title search will reveal them, and they will need to be resolved at closing. If a co-owner’s secret encumbrance caused a sale to fall through or reduced the net proceeds you received, you may have a legal claim against that co-owner for the damages caused.

What You Can Do About It

If you believe a co-owner is lying to you about property you share, the first step is to gather whatever documentation you can. Bank statements, tax returns, leases, appraisals, and correspondence can all be useful. An attorney can also use the discovery process in litigation to compel production of records a co-owner refuses to share voluntarily.

Depending on the specific facts, the legal remedies available to you may include:

• An accounting action, which forces the co-owner to produce a full financial record of all income and expenses
• A partition lawsuit, which asks the court to divide the property or order its sale and distribute the proceeds
• A fraud claim, if the co-owner’s misrepresentation caused you measurable financial harm
• A breach of fiduciary duty claim, if the co-owner was acting in a management or trustee capacity over the property
• An injunction, to stop a co-owner from taking further actions that damage your interest in the property

These claims can be brought together in a single lawsuit, and Florida courts have broad authority to create remedies that address the full scope of what a dishonest co-owner has done.

Larry Tolchinsky has handled cases where a co-owner made false statements about a property to obstruct a partition sale. He has represented co-owners across Florida since 1994 in disputes involving hidden income, misrepresented value, blocked sales, and secret encumbrances. A good piece of advice is to speak with an experienced Florida real estate lawyer as soon as you suspect something is wrong. The sooner an attorney is involved, the sooner a preservation letter can go out to protect records, and the better your position will be.

Do you have questions or comments? Then please feel free to send Larry an email or call him now at (954) 458-8655.

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