Code of Civil Procedure (CCP) Section 874.317 – Cotenant Buyout of Interests

This section of the partition statutes is important because it states the ability for a cotenant to buy out the other cotenants interests if they are not the person who requested partition by sale.

Code of Civil Procedure section 874.317 states:

1. If any cotenant requested partition by sale, the court shall, after the determination of value under Section 874.316, send notice to the parties that any cotenant except a cotenant that requested partition by sale may buy all the interests of the cotenants that requested partition by sale.
2. Not later than 45 days after the notice is sent under subdivision (a), any cotenant except a cotenant that requested partition by sale may give notice to the court that it elects to buy all the interests of the cotenants that requested partition by sale.
3. The purchase price for each of the interests of a cotenant that requested partition by sale is the value of the entire parcel determined under Section 874.316 multiplied by the cotenant's fractional ownership of the entire parcel.
4. After expiration of the period described in subdivision (b), the following rules apply:
   1. If only one cotenant elects to buy all the interests of the cotenants that requested partition by sale, the court shall notify all the parties of that fact.
   2. If more than one cotenant elects to buy all the interests of the cotenants that requested partition by sale, the court shall allocate the right to buy those interests among the electing cotenants based on each electing cotenant's existing fractional ownership of the entire parcel divided by the total existing fractional ownership of all cotenants electing to buy and send notice to all the parties of that fact and of the price to be paid by each electing cotenant.
   3. If no cotenant elects to buy all the interests of the cotenants that requested partition by sale, the court shall send notice to all the parties of that fact and resolve the partition action under paragraphs (a) and (b) of Section 874.318.
5. If the court sends notice to the parties under paragraph (1) or (2) of subdivision
6. , the court shall set a date, not sooner than 60 days after the date the notice was sent, by which electing cotenants shall pay their apportioned price into the court. After this date, the following rules apply:
   1. If all electing cotenants timely pay their apportioned price into court, the court shall issue an order reallocating all the interests of the cotenants and disburse the amounts held by the court to the persons entitled to them.
   2. If no electing cotenant timely pays its apportioned price, the court shall resolve the partition action under paragraphs (a) and (b) of Section 874.318 as if the interests of the cotenants that requested partition by sale were not purchased.
   3. If one or more but not all of the electing cotenants fail to pay their apportioned price on time, the court, on motion, shall give notice to the electing cotenants that paid their apportioned price of the interest remaining and the price for all that interest.
7. Not later than 20 days after the court gives notice pursuant to paragraph (3) of subdivision (e), any cotenant that paid may elect to purchase all of the remaining interest by paying the entire price into the court. After the 20-day period, the following rules apply:
   1. If only one cotenant pays the entire price for the remaining interest, the court shall issue an order reallocating the remaining interest to that cotenant. The court shall promptly issue an order reallocating the interests of all of the cotenants and disburse the amounts held by it to the persons entitled to them.
   2. If no cotenant pays the entire price for the remaining interest, the court shall resolve the partition action under paragraphs (a) and (b) of Section 874.318 as if the interests of the cotenants that requested partition by sale were not purchased.
   3. If more than one cotenant pays the entire price for the remaining interest, the court shall reapportion the remaining interest among those paying cotenants, based on each paying cotenant's original fractional ownership of the entire parcel divided by the total original fractional ownership of all cotenants that paid the entire price for the remaining interest. The court shall issue promptly an order reallocating all of the cotenants' interests, disburse the amounts held by it to the persons entitled to them, and promptly refund any excess payment held by the court.
8. Not later than 45 days after the court sends notice to the parties pursuant to subdivision (a), any cotenant entitled to buy an interest under this section may request the court to authorize the sale as part of the pending action of the interests of cotenants named as defendants and served with the complaint but that did not appear in the action.
9. If the court receives a timely request under subdivision (g), the court, after a hearing, may deny the request or authorize the requested additional sale on such terms as the court determines are fair and reasonable, subject to the following limitations:
   1. A sale authorized under this subdivision may occur only after the purchase prices for all interests subject to sale under subdivisions (a) to (f), inclusive, have been paid into court and those interests have been reallocated among the cotenants as provided in those subdivisions.
   2. The purchase price for the interest of a nonappearing cotenant is based on the court's determination of value under Section 874.316.

This section allows for a cotenant not requesting partition by sale to buy out the cotenant who wants the partition to occur. This section was modeled after section 7 of the Uniform Partition of Heirs Property Act and has not been amended since its enactment.

Following determination of fair market value in an action for partition by sale the court will give notice to the parties that any cotenant can buy out all the interests of the cotenants requesting partition. As long as there is no agreement concerning partition the buyout may take place. The purpose of allowing this is to let cotenants retain the property rather than have it sold entirely to a third party and the other parties who want partition will still cash out of their interest. This furthers the equitable nature of a partition case. This way all parties are benefitted or compensated fairly.

To buy out the funds must be deposited within the statutory period to the court. If more than one cotenant deposited and the funds exceed what is needed to buy out the cotenant, the court will reapportion the remaining amount.

If there are insufficient funds, the court will allow the cotenants to make up the difference or decide to partition in kind or put the property up for open-market sale.

The Partition of Real Property Act was an outgrowth of a law review article titled Historic Partition Law Reform (2019) Texas A&M Legal Research Paper Series No. 19-27 by Thomas W. Mitchell (“Law Reform”). (see also Thomas W. Mitchell, Reforming Property Law to Address Devastating Land Loss, 66 Ala.L.Rev. 1, 9, 29 (2014).

The Act enables heirs’ property owners who did not request a court to order partition by sale to buy out the interests of any of their fellow cotenants who did request partition by sale. (see Law Reform, p. 73.)

Previously, advocates “overestimated the degree to which partition sales have been a source of black land loss.” (Thomas W. Mitchell, Destabilizing the Normalization of Rural Black Land Loss (“Destabilizing”), 2005 Wis. L. Rev. 557, 581 (2005); see Faith Rivers, Inequity in Equity (Temp.Po.&Civ.Rts.L.Rev. 2007) 1, 31 (“There is little empirical data documenting claims of African-American land loss” [due to partitions].) (“Inequity”).) Others have claimed that low will-making rates for African-Americans represent a present day manifestation of the ways in which African Americans after the conclusion of the Civil War were deprived of access to attorneys and even to basic information about estate planning, but this theory has not been verified in any meaningful way. (see Law Reform p. 68.)

The Partition of Real Property Act seeks to address consequences of this type of property ownership, and which California adopted in 2022.

For example, “Shawn” wants to partition a home he owns with his siblings “Julie” and “Mike” as cotenants. Following the determination of the property’s fair market value the court informs Julie and Mike they can buy Shawn out of his interest in the property.
If they choose not to and the partition goes forward the proceeds of the sale will be divided proportionally to all three siblings’ interests in the property.

If Julie and Mike do want to buy Shawn out of the property, they need to inform the court of their intentions within 20 days. They need to deposit the amount worth Shawn’s interest with the court and the court will distribute it to Shawn.

If Julie and Mike wanted to buy Shawn out of the property and Mike failed to give notice or pay for his part of Shawn’s interest, Julie could then give notice to the court if she was willing to buy both Mike and Shawn out.

Here at Underwood Law Firm, our knowledgeable attorneys are here to help navigate the complex web of case law and statutes surrounding partitions. If you are thinking of filing a partition, are already in the midst of a partition suit, or just have any questions, please do not hesitate to reach out to our office.