WHAT IS PARTITION ‘?
The term “partition” refers to a judicial decree (a Court Order) or a voluntary agreement of co-owners to separate and terminate their common interests in the same parcel of property. The partition process does not involve a transfer of title because the parties already have title to the property. What happens is that their commonly held title is divided. The result is a change in the rights of the co-owners from common possession of the entire property into individual rights of exclusive possession of some portion of the property for each of the former co-tenants.
There are three methods of partition:
- a physical division of the property
- a sale of the property and a division of the proceeds
- a partition by appraisal where one co-tenant acquires the interests of the other co-tenants based on a Court Order and supervised appraisal.
An action for partition may also include an accounting so that a co-tenant who has advanced more than his share of funds to pay common expenses can be reimbursed for his excess contribution.
WHO CAN LEGALLY FILE A PARTITION LAWSUIT?
Although there are some exceptions, the general rule is that each co-owner has an absolute right to a partition of commonly owned property. The right to partition between co-owners is not affected by the fact that the property is subject to a lease, mortgage, or an easement. By the same token, the rights of lien holder, an easement holder, or of a tenant are not affected by the fact that a partition decree is granted by a Court.
When co-owners are husband and wife, neither may bring a lawsuit to partition their community or quasi-community property, or the separate property of either spouse that is subject to a homestead. However, a husband and wife may partition the co-ownership of non-community property that is not homesteaded.
Property owned by a partnership may be partitioned in a partnership accounting action.
Property that is held in trust for two or more beneficiaries cannot be partitioned if the partition would defeat the lawful purpose of the trust or interfere with thc functions of the trustee.
However, on termination of the trust, the beneficiaries become co-owners and any co-owner may file a lawsuit to partition the property.
There are some equitable defenses to an action for partition, including waiver and estoppel.
WHAT IS THE PROCEDURE IN A PARTITION LAWSUIT?
The procedure for a partition lawsuit is specified by statute. the lawsuit must be filed in the county in which the property is located. The Complaint must name all parties who have any recorded interest in the property or whom the Plaintiff knows claims an interest in the property. Upon filing the Complaint, the Plaintiff must record a lis pendens. The judgment in the partition lawsuit is binding on all parties to the action and on all persons who were not parties whose interest did not appear of record at the time the lis pendens was recorded.
The primary determination of the Court in a partition action is whether the property should be physically divided among the co-owners or sold. The Court will also determine the interests of the parties and the priority of all liens if that is an issue in the case. In California, it 1s presumed that it is more equitable to divide the property physically and distribute a portion to each cotenant in accordance with their respective interests. However, the Court may deem it to be more equitable to order a sale of the property and a distribution of the proceeds to the parties according to their respective interests. In order to compel a sale rather than a physical division. the Plaintiff has the burden of proof to show either (1) a division into sub-parcels of equal value cannot be made, or (2) a division of the land would substantially diminish the value of each party’s interest such that the portion reccived by each co-owner would be ot substantially less value than the cash rcceived on a sale.
WHAT IS THE ROLE OF A REFEREE IN A PARTITION LAWS UIT?
The Court can appoint a referee to manage the property while the partition action is pending or to enforce the judgment. The receiver may ec assigned the duties of collecting rents, paying property related expenses such as the mortgage, taxes, insurance and utilities, locating and hiring a real estate agent to sell the property, determining the appropriate listing price to market the property for sale. approve the terms and conditions of a sales agreement, and administering distribution of the sales proceeds to the co-owners.
The Court may also appoint a Referee to make a report on the facts and circumstances supporting whether the property should be physically divided or sold. The Referee’s recommendations are either accepted by the Court, modified, or rejected.
If the partition is to be accomplished by appraisal whereby one party purchases the other party’s interest in the property, the Court can appoint a Referee to assure there is a proper appraisal of the property and of the separate interests of the co-tenants. The Referee will prepare a report upon which the Court will determine the basis on which a co-tenant can purchase the other co-tenants’ interests in the property .
WHAT ARE THE ALTERNATIVES TO A PARTI TION LAWSUIT?
Co-owners may enter into a voluntary, written agreement for a partition of property. A common approach is to enter into a written buy-sell agreement for a partition by appraisal in which one pany can acquire the other party’s interest in the property at the appraised value. This approach to a negotiated settlement is often facilitated with the use of a professional mediator.
ATTORNEY DEBRA GRIMAILA WILL DEVELOP A COST EFFECTIVE STRATEGY TO RESOLVE YOUR PARTITION MATTER.
Orange county business lawyer, Debra Grimaila, Esq. has been successfully litigating real estate cases for over thirty-six (36) years. As a licensed real estate broker since 1989, and as a former mediator and arbitrator for the Orange County Superior Court, attorney Grimaila is uniquely positioned to understand and resolve complex real property issues. Our focus is on developing cost effective legal strategies to provide the most economic outcome for our clients. When you need help with the partition of property, call Orange County Business Lawyer, P.C. !!!
TOLL FREE: (844) 921-1937