Jim Bush, Partner at Keystone Law Group, discusses the most important things to know about a partition. Read the complete article below for more details. Click the YouTube Channel subscribe button to be notified when new videos are published.
In this article, we will discuss everything you need to know to sue for partition of property. It will address:
- What is a partition action?
- When does the right of partition apply?
- What is the cost of partition actions?
- How to file a partition action
- How to win a partition action
What Is a Partition Action?
When two or more co-owners cannot agree on how to best use or dispose of a piece of real property, they generally have a right to bring a type of lawsuit known as a partition action to the appropriate court.
By filing for partition of property, a co-owner may be able to terminate their interest in a piece of real property by forcing its sale and having the proceeds from the sale distributed equitably and fairly among the co-owners.
While it used to be challenging to successfully defend partition actions, doing so has become simpler for certain categories of people because of reforms made to California partition laws, which took effect January 1, 2022. We’ll discuss these changes in more detail throughout this article.
Inherited Property Can Be Partitioned
Partition actions can arise in the context of probate when there are disputes surrounding the disposal of a decedent’s real property that multiple beneficiaries have inherited together through an estate distribution or trust fund distribution.
If the beneficiaries do not wish to jointly own the property, and they cannot agree on how to divide up their interests in the property or on a fair price for a buyout, a partition action can be brought to force the sale of the property.
For example, when a will or trust leaves a real property to multiple beneficiaries, certain beneficiaries may wish to maintain their interests in the property, whereas other beneficiaries may wish to terminate their interests in the property through a sale. While the beneficiaries seeking to keep the property can try to buy out the other beneficiaries at a fair price, there is no guarantee that an agreement will be reached. If this is the case, the beneficiaries seeking to terminate their interests, so long as they have assumed ownership of the property, can bring a partition action to force the sale of the property.
As another example, if a decedent had owned only a percentage share of a piece of property (i.e., as a tenant in common), their beneficiaries will inherit only their share of the property upon their death. If it is undesirable or illogical for the beneficiaries to jointly own the property with its other co-owners, they could try to either make a buyout agreement with them or convince them to sell the property. If the co-owners cannot agree on how to dispose of the property, the new owners could sue for partition of property and force its sale.
Partitioning of “Heirs’ Property”
When an inherited real property has indications of familial ownership and was passed down to one or more co-owners from a relative (e.g., siblings are jointly inheriting a property that belonged to their parents), then the property may be considered “heirs’ property” and be subject to different partitioning rules as a result of the aforementioned 2022 reforms to California partition laws. Namely, instead of the non-partitioning co-owners being forced into a sale, they will be given an opportunity to buy out the partitioning co-owners at a price that represents the value of their proportional interests in the property.
It should be noted, however, that if there is an agreement among co-owners governing the partition of property, the 2022 reforms may not be applicable, even if the property otherwise qualifies an heirs’ property.
When Does the Right of Partition Apply?
The right of partition for co-owners is absolute when a piece of real property is jointly owned unless the property qualifies as heirs’ property or the co-owners previously waived the right of partition through a binding contractual agreement. In the context of probate, for example, a decedent may have explicitly disallowed their real property from being sold in their will or trust.
If the aforementioned exceptions don’t exist, any co-owner of real property can bring a lawsuit for partition in California – even in instances where only a minority of co-owners are seeking to sell. While forcing the sale of jointly owned property can seem unfair when the majority of its co-owners are looking to hold on to their interests in the property, the law does not force a party to own property they do not want.
For the reasons mentioned above, a partition lawsuit will be difficult to stop, although it is not impossible to do with help from a skilled trust and estate administration lawyer.
What Is Required to Bring a Partition Action?
The most basic requirement for anyone seeking to sue for partition of property is that they are a co-owner of the real property at issue (i.e., they must co-own the real property with at least one other person). This means that if a person’s name does not appear on title to the property, they typically do not have the standing to file a partition action, even if they eventually will be taking ownership of the property.
In the context of probate, a will or trust may designate a decedent’s home to pass to multiple estate beneficiaries or trust beneficiaries, but until the executor or trustee, respectively, transfers the title of the home to said beneficiaries, the beneficiaries will not be permitted to bring a partition action.
In instances where an executor or trustee is delaying selling or transferring a home because they are residing in it rent-free, a claim can be brought to remove and surcharge the executor or trustee for fiduciary misconduct; however, a partition action will not be an option since the beneficiaries are not officially owners of the property yet.
If this first requirement of valid ownership has been satisfied, at least the following conditions must be met to bring a partition action:
- The real property in question cannot be physically divided fairly.
- One or more co-owners want to sell the real property in question, but the other co-owners are refusing to sell.
In most instances, it is impossible to divide real property fairly and equitably. For instance, how would one go about dividing a single-family home? If one co-owner is seeking to sell a home and the other co-owner is seeking to keep it, the only reasonable approach would either be for the co-owner seeking to keep the home to buy out the other co-owner’s interest in the home or for the home to be sold and the proceeds from the sale to be divided equally between the co-owners.
It is generally in the best interests of co-owners to reach an agreement about the use and/or disposal of real property independent of the court, since partition actions can get costly; however, when an agreement cannot be reached, forcing the sale of jointly owned property through a partition action may be the only option for the co-owners seeking to terminate their interests in the property.
What Happens in a Partition Action?
When the co-owners of real estate cannot agree on how to best use or dispose of the property in question, it may be necessary for them to file a partition action with the appropriate court. This is best accomplished with help from an experienced probate lawyer, who can present their case to the judge and ensure the outcome of the dispute is in line with their clients’ interests.
Forcing the sale of jointly owned property through a partition action is a commonly used remedy in real estate disputes and one that is available to all co-owners – so long as they did not previously waive their right of partition through a legally binding contractual agreement.
What to Consider Before You Sue for Partition of Property
There are pros and cons to bringing a partition action that co-owners should consider before suing for partition of property.
The downsides of partition actions are what one might expect. They can be expensive, time-consuming and emotionally draining. One of the advantages of a partition action is that it can bring a long-standing real estate dispute to a close when co-owners cannot agree on the terms of an agreement or certain parties are refusing to cooperate.
Partition actions also present the possibility for co-owners to not only recoup their attorney’s fees and costs but also reimbursement of mortgage payments, taxes, insurance costs, the costs of repairs and renovations, and other expenditures related to the property in question.
A lawyer can help co-owners determine whether the advantages of suing for partition of property outweigh the disadvantages after learning more about the dispute at hand. If co-owners of property have considered less costly alternatives to partition actions but still are not in agreement about how to move forward, filing for partition of property is likely their best option.
How to File a Partition Action
Once co-owners have weighed the cons of partition actions against the pros and decided that a partition action is their best path forward, they should get in touch with a lawyer to help them navigate the process of bringing a partition claim. Co-owners should be prepared with copies of all documents related to the disputed property when meeting with their lawyer so the lawyer can have a comprehensive understanding of the matter at hand. These documents can include everything from the grant or trust deed to the mortgage agreement.
The lawyer will then proceed with filing a partition action with the courthouse located in the same county as the property at issue. Once the complaint is submitted, the lawyer will record with the County Recorder’s Office a notice of pendency of action, also known as a lis pendens. This type of notice serves to inform anyone who is showing interest in the property that a legal proceeding in regard to the property is currently taking place.
Once the partition case is heard by the judge, the court will make a determination about whether to uphold or deny the partition of property request. If the request is approved, the court will order the property to be sold.
Types of Partitions
Put simply, a co-owner who brings a lawsuit for partition in California is seeking to fairly and equitably divide a piece of real property among all its co-owners with the help of the court. Partition actions are used as a last resort when the co-owners of property are in disagreement about how to achieve this division, or about whether to sell at all.
There are three possible outcomes to a partition action; they include:
- Partition by Sale: The court orders the forced sale of the real property at issue; once the sale is made, the proceeds from the sale will be divided among the co-owners according to their percentage shares. The partition by sale can be ordered to occur through a private sale, public auction or by listing the property with help from a licensed real estate broker.
- Partition by Kind: The court orders the physical division of property so that each co-owner receives an undivided interest in their portion of the property. When physically dividing property fairly and equitably is possible, it is generally what the court prefers so that no co-owner is required to sell against their will.
- Partition by Appraisal: The court orders one or more co-owners to purchase the other co-owners’ interests in the real property on certain agreed-upon terms following an independent appraisal of the property. Partition by appraisal cannot be forced and is often preferred over open market sales of property, since it can eliminate high escrow fees and broker commissions. A partition by appraisal can only take place if all the involved parties agree in writing to this kind of partition.
Partition by sale is the most common type of partition action pursued. In order for the court to order a partition by sale over a partition by kind, the burden of proof will be on the party bringing the partition action to prove that either the property cannot be physically divided fairly and equitably or that the physical division of property would significantly decrease the value of each owner’s interest.
It is important to note that the parties involved in a partition lawsuit can come to an agreement outside of court even if a partition action has already been filed.
How 2022 Partition Reforms Affect Court's Preference for Partition Types
Partition by sale is the most common type of partition action pursued. In order for the court to order a partition by sale over a partition by kind, the burden of proof will be on the party bringing the partition action to prove that either the property cannot be physically divided fairly and equitably or that the physical division of property would significantly decrease the value of each owner’s interest.
It is important to note that the parties involved in a partition lawsuit can come to an agreement outside of court even if a partition action has already been filed.
As mentioned in a previous section, reforms to the partition law have affected how the court handles partition lawsuits surrounding properties that are considered heirs’ properties.
When it comes to partition types, the preference for partition by kind has been strengthened, even if it’s a partition by sale that the partitioning co-owners are seeking. The court additionally will consider the following factors when deciding between a partition by sale and partition by kind: (1) whether the value of the property would be adversely affected by the division of ownership; (2) whether any of the co-owners of the property would be rendered homeless as a result of partition by sale; and (3) whether the property carries any sentimental, cultural or historic significance, among other relevant factors.
Lastly, while the court’s preference had previously been to order partitioned properties to be sold via public auction, its preference has shifted to open market sales as a result of evidence suggesting that this approach yields substantially higher sales prices.
What Is the Cost of a Partition Action?
The cost of a partition action will depend on the nature of the litigation at hand; the more complex the litigation, the more expensive the partition action will be. It will also depend on the parties’ willingness to settle the dispute before trial.
The good news is that the attorney’s fees and costs incurred by a partition action may be recoverable. The party seeking the partition action can ask the court to award them attorney’s fees and costs from the opposing party or from the proceeds from the sale of the property.
The parties also may be able to recover payments they had made that were in addition to their ownership interest. These recoverable expenditures may include everything from mortgage payments and taxes to their contributions to improvements, renovations, or upkeep of the property. To ensure these costs can be recovered, it is crucial to keep thorough records of every payment made in relation to the property.
How to Win a Partition Action
How to win a partition action will depend on what the party bringing the partition action hopes to achieve. Perhaps all they are seeking is to receive a fair amount for their ownership interest in the property. Perhaps they are seeking to take sole ownership of the property in question. To win a partition action, parties must determine from the get-go what they hope to be the outcome of the partition lawsuit.
Finally, to achieve the best possible outcome for a partition action, it is necessary to have a probate lawyer on your team. They can help enforce your rights and ensure your interests stay protected. A lawyer might even be able to help settle the dispute outside of court, saving you a substantial amount of money.
Are you looking to sue for partition of property? Call us to learn more!
Are you wondering how to file a partition action? Or perhaps you want to learn more about the alternatives that are available to forcing the sale of jointly owned property. Keystone’s experienced probate lawyers deal in real estate disputes every day and can help you achieve the best possible outcome for your case. Request a free consultation to learn how we can help!
