2 Owners, 2 Homes, 1 Mortgage : Co-owning opens door to the real estate market.

When Cheryl Harrington appeared on the television game show High Rollers five years ago, she announced she was going to win the $10,000 top prize and buy her first home.

“You’re going to need a lot more money than that . . .,” the show’s host warned.

Harrington, an aspiring actress from New York, won the $10,000 and began a “fevered” hunt for a house in Silver Lake. It wasn’t long before she realized the game show host was right. She needed a lot more money.

About that time she hooked up with her friend of six years, C. C. Pounder. Both women were struggling television and movie actresses, both were California newcomers and neither could afford to get into Los Angeles’ pricey housing market.

So they pooled their money in 1988. A few months later, the two women moved into their first house, which was actually a fourplex.

In joining forces to crack the affordability conundrum, Harrington and Pounders became part of a growing trend.

About 12% of the state’s 1990 home buyers were untraditional households (two or more unmarried individuals, two or more related individuals and shared equity), according to the California Assn. of Realtors, double the number in 1986. CAR attributes the surge over the past five years to the ongoing affordability crisis.

Without realtor or lawyer, the two women, who had unsteady incomes and no credit, bought the $240,000 fourplex in the Country Club Park area of Los Angeles with a 20% down payment. The sellers agreed to carry the first mortgage on the property for five years.

Harrington and Pounder met the owners at a local cafe and wrote out an agreement on a yellow legal pad over coffee.

“We went back and forth about the things we wanted and the things they would do in a complete gentleman’s agreement,” said Pounder, who had a leading role in the 1988 movie “Baghdad Cafe,” and has had many roles in theater and television sitcoms.

Harrington, who grew up in the housing projects of New York and who is the first person in her immediate family to own property, and Pounder, who grew up in England, took up residence in the side-by-side, 2,500-square-foot units on the first floor of the 1926 structure.

For two years, they split the monthly mortgage payment of $1,830; now rents from the two other units cover a big chunk of it.

Although Pounder and Harrington do not have a legal agreement describing who pays for what, how tasks will be split and what will happen when only one party wants to sell, they do hold title as tenants in common (see accompanying story) with a stipulation not to sell for five years. That five-year mark has passed and they decided to keep the property.

Structural and exterior improvements come out of a house account. Each woman pays for interior improvements in her own unit.

“There was a moment where I thought, ‘Gee, who is this girl really,’ ” said Pounder, 39. “I actually remember making the decision that this is my friend and partner in business and whatever humps and bumps you have to get over.”

And, unlike an equity-sharing arrangement where one owner lives on the property and one is an investor, the problems that arise can be prickly.

“At one point, when we had just moved in and were fixing everything up,” Pounder recalled, laughing, “I had to sit Cheryl down and say . . ‘Here I am weeding and pulling and digging and you have got to learn a skill.’ And I didn’t say it that nicely, mind you.”

Said the 35-year-old Harrington: “So I started doing all the gardening and I handle all the paperwork and bookkeeping.

Jeff Rosen and Susan Smith, who asked that her real last name not be used, were longtime friends who realized that buying a house alone would be a financial strain. Both free-lance sound editors for the film industry, Rosen and Smith bought a West Los Angeles duplex in 1985 with side-by-side units and a swimming pool in the back yard.

Holding title as tenants in common, Rosen and Smith additionally stipulated co-owner’s first rights to buy at market value in the event that one party wants to sell. Each person pays $1,180 to cover the monthly mortgage; property taxes are split down the middle.

“I think it works out well with friends that are not romantically involved,” said Rosen, 37. “It also worked out well because the duplex is side by side. The only question was which side would each person take and, when we moved in, Susan’s side still had the cottage cheese ceiling so I agreed to pay 50% of the cost to have that removed and restored. I had a washer and dryer on my side so I agreed to pay half the cost for her to get a washer and dryer for her side.”

An essential prerequisite for this type of arrangement to be harmonious, Smith said, is shared values and mutual respect.

“We both share a philosophical idea about a house as a place to live, not an investment,” she said. “We are both incredibly conservative financially and responsible to a pathological degree. We are also very easy-going about personal stuff.”

Rosen and Smith bought their duplex for $302,000 with a 20% down payment and had no problem finding a lender for the loan. Smith took a friend’s tenants-in-common agreement as a prototype and had a lawyer draw one up loosely based on it.

But Smith and Rosen do not keep close track of who pays for what on maintenance, improvements and repairs.

“He pays the pool guy and I pay the gardener,” she said. “He pays the electricity and I pay the water. It doesn’t always work out, but it’s pretty close.”

When Smith wanted to build a fence in the back yard and Rosen couldn’t afford it because of law-school costs, she did it anyway, asking no compensation from Rosen.

But not everyone who enters co-ownership agreements is quite as lax about splitting costs. Pearl Yonezawa and Patti Brown, co-owners of a Silver Lake duplex who met in graduate school at UCLA, are diligent bookkeepers.

The two women had been friends for 14 years when they both realized that owning a home in Los Angeles was becoming more and more elusive. So they sold their condominiums, pooled their money and purchased a 1939 duplex with a front-yard lawn, a hilly back yard for $335,000, with 30% down.

Now, two years after escrow closed on their Silver Lake duplex, Yonezawa, senior librarian at the city of Los Angeles Public Library in Boyle Heights, and Brown, division director at Savage Information Services in Torrance, are happy co-owners.

“It has worked out really well,” said Brown. “We both work more than 40 hours a week and to have to be responsible for everything can be overwhelming. If you are going to do this kind of arrangement, you have to be real flexible and work things out. In some ways it is like a marriage, you have to negotiate. We talk about it, decide what to do and divide up tasks or hire someone to do it.”

Brown and Yonezawa, both 37, do not have a legal contract beyond a basic joint tenancy agreement. But no matter how deep the trust between two friends or partners, real estate lawyers insist that detailed legal agreements are invaluable protection from costly, unforeseen disputes.

“The fact that we have been fast and loose with it is only as a result of our long friendship,” said Yonezawa. “We always planned to get to a lawyer.”

As joint tenants, Brown and Yonezawa have the right of survivorship in the event of the other’s death, which entitles the surviving co-owner to the whole property.

“This way,” said Brown, “there would be no third party interference and the person left can do whatever they need to do to keep the property.”

Each woman pays a monthly mortgage of $1,100 and they split the rest of the house costs down the middle. They also have a reserve bank account to cover one month’s mortgage payment in an emergency.

And when disagreements come up, Brown and Yonezawa agreed, things can get pretty tense.

“Patti wanted to put up screen doors sooner than I wanted to put them up,” said Yonezawa, who handles the small carpentry chores around the duplex. “She had broken her foot and had to stay at home during that heat wave (last summer). There were a couple of months where the screen doors just sat in the garage and she was driving me crazy, and I was driving her crazy. Finally, we hired someone to put them up.”

But co-ownership can give rise to more serious problems.

Jerry Reese, who asked that his real name not be used, bought a $200,000 duplex in West Hollywood with his business partner 10 years ago. With a five-year, $50,000 loan from a bank for a down payment and the seller’s agreement to carry back paper on the property for seven years, the two men each paid a $2,000 a month mortgage payment that included money for property taxes. The rest of the costs were split down the middle.

Things worked out perfectly for seven years, Reese said, until his co-owner Michael Lane (also a pseudonym) got married to a woman whom Reese found difficult.

Lane’s wife had legal rights to half of his share of the duplex and wanted, Reese said, to be consulted on even minute decisions regarding the property, a situation that Reese says degenerated into an ugly scene. When Lane decided to sell his share, Reese found himself arguing with Lane’s wife over the property’s value.

“All of a sudden this woman was my real estate partner,” said Reese. “She wanted $325,000 for the duplex. By this time, rather than haggle over a couple of thousand, I was willing to buy them out at the price she wanted. It ended up being (appraised at) $300,000 so we settled on the flat figure.”

All the irritations notwithstanding, Reese’s experience ended on a happy note. After buying Lane out for half the market value of the duplex, Reese was able to rent the front unit for $1,300 a month. That money now covers two-thirds of his monthly mortgage.

“Whenever you go into an arrangement like this you have to think of the worse case scenario,” Reese warned. “What happens if one person can’t buy the other one out or if one person can’t pay the mortgage one month? What happens if you end up hating the other person?”

Legal and real estate experts say that people considering co-ownership should contemplate all possible disasters.

One way to do that is by articulating in a legal agreement what will happen to both parties in a variety of less than ideal situations.

While some people find co-ownership an agreeable long-term arrangement, others use it to move into a single-family home of their own.

For example, Pounder and Harrington are already moving on.

After refinancing their fourplex two years ago, each woman took out $30,000 and started looking for a house.

A newly married Pounder bought a Victorian-style duplex in the West Adams district of Los Angeles, a place she says is reminiscent of England, her former home.

Harrington is still looking, but would like to eventually own a house here and a brownstone in New York. They plan to keep the fourplex as income property.

Harrington added:

“It’s a great achievement that we couldn’t have done without each other.”

Kelleher is a Los Angeles free-lance writer who recently bought a duplex with her husband and a co-owner.