Santa Barbara Partition Lawyer

The City of Santa Barbara is a beautiful coastal city located between the mountains and the Pacific Ocean. The city's history dates back as far as 13,000 years ago. Today, Santa Barbara is home to over 88,000 residents. Santa Barbara homes and buildings are known for their architectural themes, which reflect the town's history. According to Redfin, In May 2023, Santa Barbara home prices were down 17.0% compared to last year, selling for a median price of $1.5M. On average, homes in Santa Barbara sell after 31 days on the market compared to 17 days last year. There were 38 homes sold in May this year, down from 44 last year. As a town with rich historical roots, residents of Santa Barbara often own homes through inheritance, which may lead to disputes between co-owners.

Often, Santa Barbara partition lawyers find that joint ownership problems fall into four broad categories:

• Father/Mother-Son/Daughter tenants in common in real estate;
• Brother-Sister shared tenants in common in real estate;
• Investor-Investor shared tenants in common in real estate; and
• Non-Married Partners shared tenants in common in real estate;

Partition is a court-ordered process where a property owner forces a sale of jointly owned real estate. Essentially, a partition action exists to allows people who own real estate together to take their share of the equity and go their separate ways. But, as simple as this seems, partition actions can often become complex lawsuits. Disputes commonly arise as to what type of partition may be sought and the process for determining ownership interests.

For example, “Julie” bought a house with her boyfriend, “Shawn,” thinking that they would get married one day. Later, after they had bought the house, Julie realized that her boyfriend was not the right person for her. Because Julie wanted to move on in her life, she also wanted to sell the house she bought with her boyfriend. Her boyfriend, however, was mad at Julie for breaking up with him, and so refused to agree to sell the house. Because they were not married, Julie could not go to a divorce lawyer, and because they both did not agree to sell, a realtor could not help Julie. Julie felt trapped. Julie then, however, found a partition lawyer and was able to get the house sold so she could move on with her life. A partition lawyer got the job done. The best Santa Barbara Partition Lawyer will be able to share information on this process with you.

Under the Partition of Real Property Act, the court instead appoints an appraiser to do the heavy lifting. The new statute states that the court “shall determine the fair market value of the property by ordering an appraisal.” (CCP § 874.316.) The court doesn’t have to be the one to order the appraisal, but this is only if all the co-owners agree to a different method of valuation. 

If, however, an appraisal occurs, it shall be conducted by a disinterested third-party real estate appraiser licensed to determine the fair market value of properties. After the appraisal is conducted, parties may file objections to the value and can even offer additional evidence of value to the court. 

After the valuation is complete, parties will be introduced to the key feature of the new statute: the buy-out option. If a co-owner requests a partition by sale, then the court will notify the other co-owners that they may buy all the interests of the cotenant that requested the partition. (CCP § 874.317.) 

This is, essentially, a right of first refusal. The co-owners who don’t want the property sold now have the option to simply buy out the requesting party. Additionally, the buy-out price will be based on the property’s valuation, determined earlier in the litigation. And if one or more parties exercise the buy-out, then the court will reapportion ownership percentages based on the price paid.  A top Santa Barbara Partition lawyer will be familiar with the process.

A partition action can always be resolved informally at any time prior to the first day of trial, or entry of judgment. In fact, in numerous instances, just filing the partition itself leads the other party to seek a resolution between them. We always encourage the parties to talk throughout every phase of the process, as that can lead to the best outcomes for everyone.

From our perspective, every piece of litigation is just part of a larger “negotiation.” In any negotiation, the party who has the best leverage is usually able to achieve a more favorable outcome. The lawsuit provides the client with more leverage because they have more options available to them than without the prospect of a resolution from a judge. As such, all that a lawsuit does is provide one party with more leverage in the negotiation about how to resolve the dispute. For this reason, the best way to informally resolve a dispute is to combine discussions with active litigation, so that the matter can be quickly resolved without unnecessary expense. Throughout the process, our attorneys are in touch with our clients about their options and the prospects for informal resolution through mediation or negotiation. A knowledgeable Santa Barbara Partition Attorney will be able to give you good advice on these issues.

Before the sales proceeds are distributed among the parties, a court-ordered accounting will determine the charges and credits upon each co-owner’s interest. These credits are taken out of the net proceeds before the balance is divided equally. (Southern Adjustment Bureau, Inc. v. Nelson (1964) 230 Cal.App.2d 539 (“Nelson”).) 

“When a cotenant makes advances from his own pocket to preserve the common estate, his investment in the property increases by the entire amount advanced. Upon sale of the estate, he is entitled to his reimbursement before the balance is equally divided.” (Nelson, 230 Cal.App.2d, at p. 541, citing William v. Koyer (1914) 168 Cal.369.)

As such, a party to a partition action must produce and gather their evidence and make sure that it is presented to the court so they can receive full credit for the value that they have added to the property. While a party may have a right to these credits under the law, ultimately, they will not be counted unless they can be presented in the proper form. An experienced Santa Barbara Partition Attorney will be intimately familiar with these matters.

When a court orders a partition, the trial court may order that the partition be by sale or in kind. Partitions in kind, when a property is physically divided, is the preferred method of partition, but the court has discretion to order a partition by sale and dividing the proceeds. Under California Code of Civil Procedure § 872.820 the court may order a partition by sale when under the circumstances, a sale would be more equitable than a division. The following paragraphs discuss how the Court of Appeal determines whether a trial court abused its discretion when it ordered a partition by sale in Righetti v. Righetti (2006) 2006 WL 3354026.

In Righetti, Plaintiffs Paul T. Righetti, Susan M. Righetti, Paula R. Pyche and certain trusts (“Appellants”) appealed from the judgment ordering a partition of real property by sale and division of the proceeds.

Various members of the Righetti family and family trusts owned undivided interests in multiple parcels of land totaling more than 5,600 acres. The Property had been owned by the Righetti family since the early part of the twentieth century. At the time of the suit, the property consisted of five large components referred to as Rancho Punta de la Laguna, Rancho Guadalupe, Shuman Ranch, Home Ranch West, and Home Ranch East. Additionally, on the property sat a commercial building and two-acre parcel known as the “Duck Club.”

The ownership of the property was divided as follows: 12.5 percent by Paul T. Righetti, 16.5 percent by Ernest T. Righetti, 2.5 percent by Annabelle Rubalcava and the remaining interests by four trusts established by Paul and Ernest’s branches of the family. Three trusts were controlled by Paul’s branch of the family and the fourth was controlled by Ernest’s side.

Since 1990, Paul had leased Home Ranch East and Home Ranch West from the Property owners including himself and operated the land as a cattle ranch. At the same time, Ernest leased the Shuman Ranch, Rancho Guadalupe, and portions of Rancho Laguna. He operated this land as a cattle ranch as well, with some farming on Rancho Laguna. Paul, Susan, and certain family members lived on Home Ranch and Ernest lived on Rancho Laguna.

After a long history of disputes, in late 2003, Paul, Susan, and Paula Pyche, and the trustees of the three trusts controlled by Paul’s family filed a complaint for partition of the Property. Then in July 2004, E. Michael Righetti and Andrea Righetti Fields filed a complaint in intervention, alleging an interest in the Property as beneficiaries of the Ernest Righetti Trust.

At the four-day trial in March 2005, the appellants sought partition in kind, and the respondents, although opposed to the partition, sought partition by sale in the event a partition was ordered. The intervenors sought partition by sale. The evidence at trial focused on the current and potential future use and value of the Property and its components.

The appellants appraiser testified that the total value of the Property was approximately $12,180,000 while the intervenors’ appraiser, which was also relied on by the respondents, testified that the total value was approximately $24,400,000. There was conflicting testimony as to whether Home Ranch had limited potential for agriculture because of the lack of water and soil conditions, but that it was in the path of development and could be used for residential development in the future.

Based on the undisputed testimony by family members, Rancho Guadalupe was suitable for expanded agricultural use, but it relied on the water that was piped through Rancho Laguna. Rancho Laguna was suitable for agriculture but susceptible to flooding, seepage from sewage drainage ponds, and other environmental problems. Shuman Ranch had no water supply and was subject to environmental problems due to its proximity to a toxic landfill.

Paul proposed at trial that the property be partitioned by division in kind, where his side of the family would obtain ownership of Home Ranch East, Home Ranch West, Rancho Guadalupe, and Shuman Ranch, and Ernest’s side would receive Rancho Laguna. Paul offered to compensate Ernest with cash so that the value of the post-partition ownership would be equal to the respective undivided interests. While Ernest sought a partition by sale, he offered a proposal for division in kind whereby Paul would obtain ownership of Home Ranch East and Home Ranch West, and Ernest would obtain Rancho Laguna, Rancho Guadalupe, and Shuman Ranch, and make cash payments to Paul.

After trial, the trial court entered a judgment ordering partition by sale and division of the proceeds. The judgment stated that under the circumstances, sale of the property would be more equitable than a division. The judgment also gave the parties an opportunity to agree on the manner of sale but if they could not agree, the court would appoint a referee.

The court made the following factual findings: (1) “As the widly disparate valuations of the expert testimony illustrate, the fair market value of the properties involved in the case can only be determined by sale of the properties at market.” (2) “The jointly owned real property cannot be divided equitably in kind based on ownership percentages.” (3) “Given the highly disparate character of the properties and the great number of speculative factors impacting their value, a physical division of the property would likely cause great prejudice to one or more of the parties. The properties are so situated that a division into sub-parcels of equal value cannot be made.” The appellants appealed this judgment.

The appellants contended that the trial court applied an incorrect legal standard in ordering partition by sale instead of division in kind. They argued that the trial court erred as a matter of law by concluding that the statutory preference for partition in kind did not apply. The Court of Appeal for the Second District disagreed.

The Court of Appeal emphasized that CCP § 872.810 provides for the division of property in kind, but that CCP § 872.820 provides that the property shall be sold and the proceeds be divided among the parties when the court “determines that, under the circumstances, sale and division of the proceeds would be more equitable than division of the property.”

While the prior law had a strong preference for partition in kind, the 1976 enactment of 872.810 and 872.820 expanded the availability of partition by sale. The legislature recognized that in modern day, sale of the property would be preferable to physical division since the value of the divided parcels frequently did not equal the value of the whole parcel before division. Other factors like zoning restrictions or impracticality could also lead to this preference.

According to the Court of Appeal, a trial court could determine whether of partition by sale would be more equitable than physical division and that determination would not be disturbed on appeal. The judgment made by the trial court coincided with section 872.820 and included factual findings supporting its’ conclusion.

The appellants conceded that the plain language of CCP 872.840 gave the court discretion to order a partition by sale when the interests in the Property were held by express trusts but claimed that such discretion did not create an exception to the section 872.820 requirement of finding that a sale was “more equitable” than division in kind and that the word “discretion” did not mean “unbridled” discretion.

While the Court of Appeal agreed that discretion could not be exercised in an “unbridled” fashion, the appellants failed to cite evidentiary support for that assertion. There was no evidence that a partition by sale would interfere with the operations of the trusts or upset any estate planning goals embodied in the trusts.

Contrary to the appellants’ claim that there was insufficient evidence to support a finding that partition was more equitable than partition by division in kind, the Court of Appeal found that there was substantial evidence to support the judgment. The evidence showed that some areas were suitable for agriculture while others were not. Additionally, there was little to no evidence that a partition in kind could be accomplished in a manner that would ensure a fair and equal division of the limited available water or valuable areas within the Property.

The trial court had identified speculative factors shown by the evidence that complicated a partition in kind, such as the trusts that had several beneficiaries with contingent interests. The evidence showed that the court could find that a division in kind could not be devised in a way that would adequately address the small fractional interests of certain parties. Although a party seeking a partition by sale may have had the evidentiary burden of overcoming a presumption favoring division in kind, on appeal the trial court’s ruling was presumed correct and the appellants had the burden of providing the order constituted an abuse of discretion.

The appellants also attempted to argue that a “forced sale” conflicted with the public policy respecting the sanctity of a family home. The Court of Appeal distinguishes this situation by clarifying that although some of the family members resided on the property, many did not and none claimed all 5,600 acres as a family home. In addition, the court did not order a forced sale such as a foreclosure, but rather provided that the parties reach an agreement on the manner of sale. Therefore, the Court of Appeal affirmed the judgment.

A court’s determination of ownership interests in a property depends on the facts and circumstances of each particular case. Factors such as agreements and who pays for certain expenses for the property can ultimately affect the outcome of a partition case. If you are considering partition as an option, or find yourself defending one, then you may benefit from good legal advice on the topic. Please contact Underwood Law Firm, P.C., for an initial consultation.

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