Q: My son owns a condominium that I rent out for him because he lives in California. For the past few years, I have had all of the responsibilty for leasing, making mortgage payments, cleaning, painting and repairs.

He now needs some cash to buy property in California. He would like to give me a 75 percent ownership, as tenants in common, for a certain sum. This sum is approximately the equity he has in the condominium, which has been appreciating over the past few years. To sell the condominium at this time would mean breaking the lease, paying sales charges, closing costs, etc. Also, it may take several weeks or months to complete settlement, and he would like the money as soon as possible.

Is the proposal legal, and how is it accomplished?

A: The proposal is legal, but raises a number of questions. When property is owned as a tenant in common with another owner, the percentage of ownership interest does not have to be divided equally. In fact, one tenant in common often owns a differing interest in the property - the interest being dependent on the terms and circumstances of the transaction and the down payment put in by each of the individual parties.

Thus, if your son owns 100 percent interest, he certainly can convey all or part of his interest to you, as a tenant in common. Your lawyer will be able to prepare the appropriate deed and have it recorded among the land records in the county where your property is located.

However, you should consider the tax implications of your transaction. If, for example, you are buying out a 75 percent interest from your son, he may have to pay a capital gains tax on the profits that he is making on the transaction. I suspect that since this is rental property, he has been depreciating it every year, and he might be hit with a substantial tax.

You raised a question about the time considerations involved in this proposed transaction. Don't forget: there is a mortgage on the propety, and your mortgage lender may require a credit check before permitting you to take an ownership interest in the property. The standard "boiler plate" language in most deeds of trust (the mortgage documents) usually prohibits any sale or transfer of all or part of the property, without the specific permission of the mortgage lender. Thus, it may very well be that your lender can delay the process about as long as it will take you to sell the property.

Why not consider another alternative, which can be accomplished farily rapidly, will save your son taxes, and will not require the lender's approval of the assumption? You son has equity in the property. You could lend him the money he needs, and put a second deed of trust on the property, thereby securing your loan.

This way, your son can borrow on the equity, and pay you a reasonable rate of return - and of course the interest payments are fully deductible for tax purposes. Your son could also save the capital gains tax, since he has not yet made any profit out of the transaction.

From your point of view, you could save yourself the legal costs involved in a transfer of the property, and you could save yourself the burden and the headache of having to be responsible for a portion of the mortgage payment. In fact, this might have a substantial impact on your credit, if you are seeking other financing for other projects.

And finally, you would be fully secured on your investment, and could get a nice rate of return from your son.