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Heritage Law Group June 23, 2021

What happens if two people own property jointly and one wants to cash out and the other doesn’t? Maybe they inherited the property and now disagree on what to do with it. Or maybe they bought the property as co-owners, and now find themselves in constant disagreement. One co-owner decides enough is enough and wants out.

California law approaches this situation by allowing the co-owner or co-tenant who wants to sell to seek a legal partition of the property. However, the partitioning process does not generally apply if the co-owners are spouses or legally recognized domestic partners. In that case, it’s usually a matter of family law, not partitioning.

With more than two decades of experience in real estate law, The Heritage Law Group can help mediate disputes in hopes of avoiding costly and emotionally draining lawsuits. Our attorneys are also seasoned courtroom veterans, so we can help resolve a partition situation through any and all means. We have offices in both San Jose and Aliso Viejo, so we serve clients in both Northern and Southern California.

What Is Partition?

California Code of Civil Procedure under C.C.P. 872.210 provides for partition action when it comes to real property. A partition does not create a new title, but instead is a way to divide property between co-owners, often pending sale or a buyout by one co-owner.

The co-owners may have inherited the property and now disagree on what to do with it, or they are invested, ownership partners. By law, invested ownership partners have the right to sell whenever they choose unless they waived that right when signing on.

As mentioned briefly above, spouses and domestic partners who co-own property cannot generally partition it. Since California is a community property state, the spouses or partners have, by law, equal shares in ownership. Thus it becomes a matter of family law, not partitioning.

Methods of Partition

Under what is called a California Partition Action, three types of partition are available: partition in kind, partition by appraisal, and partition by sale.

  • Partition in Kind - Also known as actual partition, involves property that is divisible. Real property generally does not fall into this category unless it’s an undeveloped parcel of land. The land is divided by its proportional value among the owners and each individual is granted independent ownership of their parcel of land.

  • Partition By Appraisal - This is initiated jointly by the partners. They will agree upon getting the property appraised by a mutually acceptable appraiser and then sell the property at that value, or let one co-owner buy out the other(s) at that appraised price.

Both partition in kind and partition by appraisal can be carried out independent of the court system. They can be done voluntarily, or with the help of mediators. If the co-owners cannot agree on either option, or on their individual percentage of ownership, one co-owner (or more) may decide to file a petition called a Lis Pendens, or Notice of Pending Action to Partition Real Property, with the court in the county where the property is located. 

Partition By Sale

Though the petition can request a partition in kind, the most likely reason for a petition is to sell the property and divide the proceeds, a process called partition by sale, or partition by judgment.

The process will begin with an interlocutory hearing, which will result in an interlocutory judgment, by which the judge will basically decide the ownership percentage of all the partners. The judge will then appoint a referee, who will take control of the property and select a real estate agent. Even if one co-owner refuses to sell, the judge can order the sale over that person’s objections.

In the end, the proceeds from the sale – minus attorney’s fees, commissions to the real estate agents involved, the referee’s fees, liens being paid off, and any other costs associated with the sale – will be divided among the partners according to their percentage of ownership.

Work With an Experienced Real Estate Attorney

The benefits of the co-owners agreeing among themselves to a partition in kind or a partition by appraisal can be immense in terms of dollars saved on the court process and associated legal fees. Many co-ownership situations, however, are already strained, and getting all parties to agree can be difficult and stressful. Our attorneys can help negotiate and mediate with all parties to help you arrive at an equitable partition, whether in kind or by appraisal.

If matters have already broken down to the point that the partition needs to go to court, we can help with that process as well. Whether you’re the petitioner or a defendant who doesn’t want to sell, we can represent your interests in court to strive for the best possible outcome.

The Heritage Law Group is active in both Southern and Northern California, with offices in Aliso Viejo and San Jose. Our real estate attorneys stand ready to help you with all disputes and challenges you may face. Contact us immediately when you and your co-owner(s) reach an impasse overselling or not selling the property.