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Partition Lawsuit FAQs
When it comes to complicated legal matters like partition lawsuits, it’s normal to seek detailed information from your attorney. The following are the most common questions we receive in regards to partition lawsuits.
What is a Partition Lawsuit?
A Partition lawsuit is a complex, litigation matter heavily driven by statutory procedure. A Partition lawsuit is used when property is owned by more than one person or entity and one of the owners desires to sell his interest when the other owner(s) do not wish to sell.
In California, a co-owner has the absolute right to sell his interest in such a circumstance, even if the other co-owner(s) do not wish to sell, but must first obtain a Court’s judgment of partition by sale, or partition in kind.
In Orange County, California, most residential partition actions obtain a judgment for partition by sale, at an appraised fair market value. A receiver may need to be appointed to oversee the sale if the parties do not remain cooperative during the process.
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. This changes 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 co-owner.
The 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-owner acquires the interests of the other co-owners based on a Court Ordered and supervised appraisal.
An action for partition may also include an accounting so that a co-owner who has advanced more than his share of funds to pay common expenses can be reimbursed.
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 easement. By the same token, the rights of a lien holder, an easement holder or 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 the 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.
How Do You File 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 and whom the Plaintiff knows claims an interest in the property.
Upon filing the Complaint, the Plaintiff must record a lis pendens. The judgment in a real estate 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 is presumed that it is more equitable to divide the property physically and distribute a portion to each co-owner 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:
- a division into sub-parcels of equal value cannot be made; or
- a division of the land would substantially diminish the value of each party’s interest such that the portion received by each co-owner would be of substantially less value than the cash received on a sale.
What Is The Role Of A Receiver In A Partition Lawsuit?
The Court can appoint a receiver to manage the property while the partition action is pending or to enforce the judgment. The receiver may be 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, approving 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 receiver to make a report on the facts and circumstances to determine whether the property should be physically divided or sold. The receiver’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 receiver to assure there is a proper appraisal of the property and of the separate interests of the co-owners. The receiver will prepare a report upon which the Court will determine the basis upon which a co-owner can purchase the other co-owners’ interest in the property.
What are the Alternatives to a Partition Lawsuit?
Co-owners may enter into a voluntary, written agreement for the partition of property. A common approach is to enter into a written buy-sell agreement for a partition by appraisal in which one party 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.
How can Orange County Business Lawyer, PC Help With Your Partition Lawsuit?
Our attorneys are perfectly positioned professionally to navigate you through the complicated procedure of a PARTITION LAWSUIT, as we have successfully done for others. Orange County Business Lawyer, P.C., offers the unique combination of not only practicing business and real estate law for almost thirty-two (32) years, we have had licensed real estate brokers since 1989. Our vast real estate transactional and real estate litigation background will help you to develop a COST EFFECTIVE partition strategy and guide you to a favorable result. This is critical in a Partition claim, which contains many hidden liability land mines for the unwary litigant.
Choose Orange County Business Lawyer, PC as your partition attorney! Call now! (844) 921-1937
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