Real estate is the most costly asset most individuals will ever buy. For many, they obtain real property by sharing the cost with other people. If everything goes well, joint ownership works wonders, but what happens when co-owners disagree on how to use the assets?
In this case, any co-owner can initiate and maintain a partition action, requesting the court to divide the real property fairly and equitably among the parties. Filing legal action can be challenging, especially with the complicated California court system. An oral agreement between you and your partners can affect title, lengthy accounting procedures can increase litigation costs, and mortgages can affect distributions. Since every case is unique, you need legal assistance. Los Angeles Business & Real Estate Law Firm is well-acquainted with partition laws. We can help you with a pre-partition agreement, negotiation settlements, joint sale agreements, ending your co-ownership disputes, unlocking your property’s equity, and protecting your rights.
Defining California Partition Action
A California partition action happens when co-owners disagree about a property’s partition, including sharing its title. They can disagree about the cost, sale proceedings, and selling it in the first place. Any co-signer of the real property can initiate and maintain the partition action.
Under California Civil Procedure Code Section 872.210, a partition suit does not create another title to the real property. Instead, it provides a method to share real assets between the co-owners. Typically, co-owners are entitled to file a partition lawsuit unless they have signed an agreement waiving the entitlement to file a partition suit on reasonable terms.
You can file a partition lawsuit to terminate your interest as a co-owner or your entire ownership via sale or physical division.
According to California Civil Procedure Code Section 872.210, any person wishing to dissolve joint ownership with somebody else is legally entitled to sell their interest. Typical parties to a partition action include the following:
- Romantic — The most common parties to partition are co-owners who were previously romantically involved but are no longer together. Partition action between former romantic parties is the non-married version of a divorce. Typically, one party will continue living in the asset while the other moves out. The party not residing in the property might want to sell it to receive their equity in the asset or remove their name from the mortgage.
- Family members and inheritance — While most co-owners inherit real property with their relatives, others buy assets with loved ones. Generally, a co-owner who does not live at the asset and receives no benefits from their inheritance will force the sale of the property to receive their inheritance when the sibling living at or renting out the family home fails to cooperate. If the asset is yet to be transferred from the estate or trust to the beneficiaries, the matter can be best solved in a probate court.
- Friends — Friends may assist in obtaining a loan for the home, contributing to mortgage payments, or investing in an asset neither of the parties could afford on their own.
Please note that the law does not allow spouses and registered domestic partners to seek a partition action. The law deems dissolution of marital property disputes community property matters and handles them as family law matters. Nevertheless, the parties are entitled to partition if the couple purchased the asset before their domestic partnership was registered with the state or their marriage.
What You Bring When Filing Your Partition Action
The basic requirement is proving you are a co-owner of the property. If your name does not appear on the asset’s title, you cannot file legal action even if you will eventually take ownership.
Regarding probate, a trust or will can be designated a deceased’s house to transfer to several beneficiaries. However, until the trustee or executor transfers the home’s title to the beneficiaries, the beneficiaries cannot lawfully file a partition action. If, for instance, a trustee or an executor is delaying transferring or selling a house because they live there rent-free, the beneficiaries should instead file a claim to remove the trustee or executor.
Different Types of Partition
Typically, a person who files a partition action in court seeks to equitably and fairly divide the property among co-owners. A partition action is the last resort when co-signers cannot agree on whether to divide or sell the asset.
There are three (3) potential results of a California partition action, including:
- Partition by sale — The judge orders a forced sale of your property, and the sale proceeds are divided among joint owners based on the percentage of shares. This outcome can happen by listing your asset with a certified real estate brokerage firm or through a public auction or private sale.
- Partition by appraisal — After the property appraisal, the judge orders at least one co-owner to buy the other joint owners’ interests in your asset on specific agreed-upon conditions. The judge cannot force this outcome; it will only happen if all parties agree to it in writing. It is preferred to open market property sales since it will eliminate high broker commissions and escrow fees.
- Partition by kind — The judge orders the division of the asset so that every co-owner receives an undivided interest in the portion. If dividing property equitably and fairly is a possibility, the judge will prefer so that nobody can sell against their will.
Partition by sale is the most sought-after outcome. Before the court orders a partition by sale over a partition by kind, you must prove that the asset cannot be divided equitably and fairly or that the division of your property will significantly reduce the worth of all joint owner’s interests.
Involved parties can agree outside the courtroom even after one co-owner files the partition action.
Effects of 2022 Partition Reform on Judges’ Preferences for Partition Categories
Regarding partition types, 2022 reforms strengthen the preference for partition by kind, regardless of whether you file a California partition by sale. Moreover, the judge should consider the factors below when choosing between partition by kind and partition by sale:
- Whether dividing ownership would significantly affect the property’s value
- Whether the asset carries historic, cultural, or sentimental significance
- Whether any co-owner would be rendered homeless after partition by sale
- While the judge’s preference would previously have been selling assets through a public auction, their preference now is an open market sale since the approach yields more significant sales prices.
How to File Your Partition Action
Discussed below are the different stages of a partition action:
Filing Your Partition Action
The first step involves researching your partition complaint components. You should review a deed, among other title documents, to ensure you qualify to file the suit.
After you have proof of real estate ownership, you should complete your complaint with the relevant allegations under the CCP. The allegations include the following:
- The property’s description
- A statement of the asset’s amenability to partition
- A request for legal relief
- A statement of proper jurisdiction and venue
Moreover, it would help if you accompanied your lawsuit with other forms the California Judicial Council needs. Since these requirements are technical, seeking skilled legal assistance can be helpful.
After filing the lawsuit, your co-owners should bring a formal answer or response. The response should comply with the CCP requirements and contain specific allegations to be valid. Failing to adhere to the requirements can result in a demurrer.
Determining the Involved Parties’ Interests
Next, the judge will know the joint owners’ interest in the asset through:
- A trial,
- A court motion
- A consensus between lawyers about the co-owners’ interests
Typically, a reference to your deed on file will determine the ownership interest in the asset. However, more investigation could be essential if there are interest arguments in your deed. The arguments are about the joint owners’ agreement regarding the property or are based on the variations between tenancies and joint tenants.
Your real estate attorney should be acquainted with the differences in deeds and offer insight into various arguments that could stem from the nature of the joint owners’ interest as outlined in the deed.
Determining ownership interests ends the initial phase of your partition lawsuit. Finally, the court will enter an interlocutory judgment.
Appointing Your Partition Referee
Entering an interlocutory judgment means your asset is ready for sale. The judge will appoint an agent or a referee to sell the asset based on your interlocutory judgment determinations.
The sale is a judicial sale. California laws recognize that the property’s winning offer remains incomplete until the judge verifies the sale. Any individual except a lawyer for a co-owner, a party’s conservator/guardian, or a referee can buy the property.
Moreover, the referee can perform other acts essential to completing your sale. When an issue arises, your referee can seek clarification from the court on completing your property sale.
Dividing Sale Proceeds via an Accounting
After selling the property, your referee will share the sale proceeds among co-owners according to the amounts disbursed for the common benefit.
Once the judge confirms the sale, they can give an order concerning your sale proceeds. Under CCP 873.820, your sale proceeds should be applied clearly and should go towards:
- Paying sale expenses
- Payment of other partition costs
- Payment of liens on the asset
- Distribution of the remaining amount to the co-owners in proportion to the shares
Finally, the court will determine whether one co-owner has contributed above their share to their asset as improvements or taxes. For instance, if you are a 40% property owner but have paid taxes to the asset, they can claim the remaining 60% above your interest in your property. Your qualified real estate attorney should assist you in determining your claim to the sale proceeds and making compelling arguments in the courtroom.
How to Win Your Partition Lawsuit
There are many ways to prevail in a lawsuit. Therefore, how an individual wins depends on what they want to achieve. Different methods to win your suit include the following:
- Getting the asset bought at a fair cost — Maybe a person wants to terminate their interests in the asset but is not opposed to any joint owners purchasing their share. In this case, winning would entail reaching an equitable and fair buyout agreement.
- Selling the asset on the open market —If you want to keep your property but do not have enough money to buy out your case, winning would be selling your asset on the open market for fair market value.
- Having your co-owner relocate and rent out the property —If you want your asset to generate income, winning, in this case, would involve agreeing that the co-owner residing in the property move out so that you can rent out the home.
- Receiving reimbursement for the money you put into your asset — If you have paid all expenses like mortgage, repairs, and taxes on an asset you have jointly inherited, prevailing in the case would mean receiving reimbursement of the payment you made.
- Receiving undivided interests in your asset — If the asset can be equitably and fairly divided, prevailing would be the court ruling a partition by kind so the plaintiff can have an undivided interest in their property. It will allow them to rent out, maintain, or sell the asset.
- Buying out the other co-owners for their proportional shares of the real property
The key to winning your partition action is doing the following:
- Stay organized — Ensure you have all documents related to the property’s ownership. Keep a filing system and label every section accordingly.
- Have clear communications — Communicating clearly with your co-owners ensures everyone understands what is expected of them.
- Be active and take minutes — As an investor, you should attend all meetings and take minutes. Keeping records about what you discussed assists in proving all discrepancies.
- Clear communication of your wishes and desires — There is probably no better way to prevail in a suit than communicating effectively and efficiently. Ensure you communicate with all joint owners and say what you wish and can sacrifice to find common ground. If you cannot reach a mediation, speak to your lawyer.
- Be willing to negotiate — It is in your best interest to negotiate. Negotiations can offer a resolution for the involved parties without substantial fees.
- Consult an attorney — Schedule an appointment with a skilled real estate law attorney to determine the best strategies to realize your business goals.
Can You Stop a Filed Partition Action?
You cannot stop a partition suit. Every co-owner has an absolute right to the lawsuit.
If you do not want to partition the property, you can do the following to slow down or prevent a forced sale:
- Buying out other co-owners’ interests
- Ensure the plaintiff is entitled to partition the asset
- Check deeds to ensure all involved parties have an ownership/title interest
- Ensure no breach of contract happened between interested parties
- Checking the contract for a waiver of entitlement to partition
Cost of Filing Your Partition Action
The cost of filing a suit depends on the nature of your claim. The more complicated the matter, the more expensive your partition action will be. Moreover, it depends on the involved parties’ willingness to resolve the matter before trial.
Fortunately, you can recover the costs and attorney’s fees incurred when bringing the action. You, as the plaintiff, can request the judge award you costs and attorney’s fees from the opposing parties or the property’s sale proceeds.
You can also recover payments you made on top of your ownership interest. The recoverable expenses can include the following:
- Taxes
- Renovations
- Mortgage payments
How Long Does It Take to Process Your Partition Action?
Generally, proceeding to trial on a partition lawsuit takes two (2) years. The exact time frame depends on factors like:
- Whether there are discovery disputes
- How complicated the matter is
- The court’s trial scheduling issues
Most cases are settled without going to trial. How quickly co-owners negotiate or mediate the matter depends on your attorney’s effectiveness. An experienced lawyer will identify opportunities to assist you in settling the case favorably sooner and with less spending.
Why You Should Consider Alternatives to Partition Action
Even when you believe litigation is inevitable, try achieving a voluntary solution and resolving your issues with other joint owners. A voluntary sale on the open market will yield more money than a forced sale. Additionally, it will prevent a loss in value due to litigation.
If your partners disagree, send them a letter that outlines the law of partition and forced sales. Use legal citations and numbers to verify that filing a partition action could affect you emotionally and financially.
Find a Seasoned Real Estate Lawyer Near Me
A partition action is a lawsuit between real property owners who cannot agree on any aspect of the property’s management, like whether to sell it. When you disagree, emotions can run high, particularly if a partnership is breaking up or a divorce is involved, and you need skilled legal guidance.
At Los Angeles Business & Real Estate Law Firm, we are advocates for life’s opportunities and challenges and are dedicated to ensuring you obtain the most favorable case outcome. When we represent you in your partition lawsuit, you can rest assured that we can offer sound legal counsel and relentless advocacy, irrespective of your side of the action. Please contact our legal office at 310-796-7794 to schedule your initial consultation and learn how we can help you.
