Revisiting Partitions and Accounting – Part Three

April 12, 2022 | Category: BPE Newsletter, Real Estate, Real Estate Law

Revisiting Partitions and Accounting – Part Three

By: Alexander J. Hinman, Esq.

April 12, 2022

In, Part One of our 2022 Partition series defined what Partitions are and how they work, Part Two focused on the accounting stage of the partition and how the proceeds of the partitioned property will be divided between the former owners in court. Part 3 will focus on specific types of expenditures and whether or not a co-owner can recoup those costs in the Accounting stage of a Partition litigation.

Pre-Ownership Interest:

One area where a cotenant’s out-of-pocket advances may be unrecoverable is if a party makes improvements to the property before acquiring an ownership interest. This typically occurs in a situation where one party has sole ownership of the property initially and a significant other is added to the deed thereafter. Here, absent a contract between the parties for any reimbursement of the expenditures made prior to acquiring an ownership interest, reimbursement for these improvements is generally not available. As stated above, the court has the authority to make determinations based on principles of equity, so this is still subject to the court’s discretion.

Repairs By Cotenant In Possession:

Next, there is case law to support that reimbursement for repairs made by a cotenant in possession should not be awarded. “When one cotenant has made expenditures that were only for the ordinary type of repairs for maintenance and preservation of the property, and the property was occupied solely by the cotenant making the expenditures, the court may refuse to reimburse that cotenant. (Gerontopoulos v. Gerontopoulos (1937) 20 Cal.App.2d 261, 265-266.) Thus, in a situation where only one (or some) of the cotenants are residing at the property, routine maintenance may be excluded from the accounting.

Non-Permanent or Not Necessary:

Next, any non-permanent improvements are typically unrecoverable. Non-permanent improvements can take many forms, but items such as blinds, curtains, and window shades ordinarily fall within these parameters. Further, and generally of higher economic consequence, improvements that are not necessary to preserve the property may potentially be excluded. In Ventre v. Tiscornia (1913) 23 Cal.App. 598, 605, the court held that “[w]here it is shown that one cotenant in common has, in good faith, with or without the consent of his cotenant, expended money in making permanent improvements which were necessary to the preservation of the common property, partition should not be decreed without first counting the cost of such improvements and making a suitable allowance for the same.” Thus, this opens the door for a contention that the improvements were not necessary for the preservation of the common property. Typically, this argument has the most support when improvements are made to suit the cotenant’s taste, rather than borne out of any necessity.

Rental Payments:

Another area that crops up from time to time is a cotenant seeking rent payments from the cotenant in possession. Unlike many of the considerations addressed, the rules surrounding this scenario are more definitive. By definition, a joint tenancy ownership means equal ownership. (see Civ. Code § 683.) All joint tenants have an equal right to possess and use the entire jointly owned property. (see Brunscher v. Reagh (1958) 164 Cal.App.2d 174, 176.) By extension, and because all owners have an equal right to occupy and use the entire property, no joint tenant (or tenant in common) has the right to collect rent from a cotenant. The exception to this well-settled rule is if there is an agreement to the contrary or if a cotenant has been ousted by the other cotenant.

Attorneys’ Fees:

The final issue in the accounting stage is the apportionment of attorney’s fees. Code of Civil Procedure section 874.040 provides that “the court shall apportion the costs of partition among the parties in proportion to their interests or make other such apportionment as may be equitable.” These costs include reasonable attorneys’ fees incurred or paid by a party for the “common benefit.” (Orien v. Lutz, (2017) 16 Cal.App.5th 957.) The Supreme Court has addressed whether a contested partition action can be considered for the common benefit and has determined that expenditures accrued in the maintenance of partition actions can be considered for the benefit of those entitled to their respective share. (Cappuccio v. Caire (1932) 215 Cal. 518, 528-529.) As this is an equitable determination, the court will consider each parties respective fees related to the action in conjunction with the party’s respective shares and interests in the property. While recovering 100% of attorneys’ fees is generally unrealistic, the greater the showing that the opposing party needlessly dragged out the partition, the higher the likelihood of recovering a greater percentage of fees expended by the prevailing party.

The reality is that Partition actions in California are complicated, and every person’s situation is different. If you are facing a legal issue of any kind, it is important to get competent legal advice immediately so that you can best protect your interests. If you are trying to begin a partition or have received a demand letter from a co-owner, contact a legal professional today to discuss your options and the best path forward.

The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.

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