Revisiting Partitions and Accounting – Part One

Revisiting Partitions and Accounting – Part One

By: Alexander J. Hinman, Esq.

March 22, 2022

Given the currently favorable market conditions, an owner of a jointly held property who is no longer getting along with their co-owner has every reason to want to sell. But what happens when the other owner doesn’t agree? With the current increase in legal disputes between co-owners of real estate, and the recently adopted Uniform Partition of Heirs Property Act, it is a good time to reprise and update our 2017 Series on Partition Sales. Today’s Article, Part 1, will focus on what Partitions are and how they work.

By definition, a partition is the procedure for segregating and terminating common interests in the same parcel of property. (14859 Moorpark Homeowner’s Ass’n v. VRT Corp. (1998) 63 Cal.App.4th 1396, 1404–1405.) A partition can be effectuated by a voluntary agreement; however, when the parties cannot agree, the co-owner who wants out must file a lawsuit and obtain a court order to force the sale. A lawsuit for partition can take one of two forms: (1) a partition in kind, or (2) a partition by sale. A partition in kind is a literal division of property, where each co-owner retains a portion of the property relative to their ownership interest. For example, if you are a joint-tenant (or tenant in common) with another co-owner and the property consists of a 100-acre parcel of land, a partition in kind separates the plot into two parcels, with each party now retaining sole ownership of a 50-acre parcel.

By contrast, a partition by sale forces the separation of ownership interests by either forcing a sale of the property or having one of the co-owners purchase the ownership interest from the other co-owner(s). A partition by sale is appropriate when it is impractical to divide the property in the manner described in the partition by kind. This is almost always the case if the co-ownership involves a single-family residence, as the logistics of a partition in kind for this type of property are unworkable.

Ordinarily, each cotenant has an absolute right to partition. (Civ. Proc. Code, § 872.710(b); see also Orien v. Lutz (2017) 16 Cal.App. 5th 957, 962.) This has been established through statutory authority and substantial case law. While there are limited exceptions, these almost always revolve around agreements to the contrary, which are exceedingly rare when it comes to single-family homes. Considering there is a large body of case law and statutory authority providing an absolute right to partition, this should be smooth sailing, right? Not so fast…

Once the co-owners sell the property, whether by agreement or by Court order, the next question will be what portion of profits each owner will get from the sale. Unless the parties agree on how to divide the proceeds, the Judge will determine what calculation of the proceeds each party is entitled to. Part two of our series will describe how this is done.

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 attorneys at BPE Law are well versed in how the courts interpret and apply the laws related to partition of real estate.

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.

Recent and Popular Articles From Our Blog:

2020 Blogs:

2021 Blogs: