California Partition Law Blog
Joint ownership of property carries a significant number of rights with it. However, a joint owner cannot sell the property without permission from other co-owners. If one co-owner wants to sell or encumber the entire property and the other co-owner disagrees this can cause conflict. Outside of marriage, property is usually owned as a tenancy in common, a joint tenancy, or as a partnership. (Civ. Code § 686.) This type of ownership status usually stays the same over the course of one’s ownership.
What rights do you have as a joint tenant?
In a joint tenancy, all co-owners need to own the property in equal shares and must all get their ownership interests at the same time through the same instrument. (Tenhet v. Boswell (1976) 18 Cal.3d 150, 155.) A joint tenancy carries with it the right of survivorship so if one co-owner dies, the other inherits that share automatically.
What rights do you have as a tenant in common?
Tenancy in common is considered the preferred method of property ownership in California. (Wilson v. S.L. Rey, Inc. (1993) 17 Cal.App.4th 234, 242 (S.L. Rey).) As tenants in common, you and your co-owners can hold unequal interests. (Civ. Code § 685, 686.) Unlike with joint tenancy there is no right of survivorship, and an owner’s interest can pass through their will. (Prob. Code § 5306.) A tenant in common can own an interest in the property that is proportionate to their unequal contribution to the cost of acquisition. (Schmitt v. Felix (1958) 157 Cal.App.2d 642, 646.) This means when the property is purchased, with Owner 1 paying 30% and Owner 2 paying 70% of the purchase price, their ownership interest shares can reflect those percentages. This is unlike joint tenancy where unequal contribution still guarantees equal ownership between co-owners.
What rights do you have in a partnership?
Property acquired as part of a partnership belongs to the partnership and not the partners individually. (Corp. Code § 16203.) In a partnership a “co-owner” can only use and possess the property on behalf of the partnership. (Corp. Code § 16401, subd. (g).)
Partners can transfer property between one another for partnership purposes without the property losing its partnership character. (Crandall v. Schnouser (1929) 207 Cal. 772, 776.) Partners can buy out other partners’ interests. (Paola v. Huston (1957) 150 Cal.App.2d 206, 210-211.)
What can you do with your own interest as a co-owner?
A co-owner can sell or encumber their interest in the property without permission from other co-owners, which can lead to conflicts and potential partition actions.
Tenants in common can all possess and share possession of the entire property. (Kapner v. Meadowlark Ranch Assn. (2004) 116 Cal.App.4th 1182, 1189.) Each co-tenant can improve the property. Cotenants can also sell their own interest in the property without approval or consent from the other owners. (Wilk v. Vencill (1947) 30 Cal.2d 104, 108-109 [“One joint tenant may dispose of his interest without the consent of the other”].) Under a joint tenancy, a co-owner disposing of their interest causes the joint tenancy to sever and become a tenancy in common. (Estate of Propst (1990) 50 Cal.3d 448, 455.)
Under a partnership, the partners can use and possess the property for the partnership.
What might happen if you try to sell the entire property?
A co-owner cannot encumber or convey the entire property. (Buller v. Buller (1944) 62 Cal.App.2d 694, 698.) As a tenant in common or other co-owner, if you want to force a sale on the entire property you will need to begin a partition action. A co-tenant cannot force another to sell the property. (Higgins v. Eva (1928) 204 Cal.231, 238.) As a co-owner, whether you are part of a partnership, joint tenancy, or tenancy in common you have an absolute right to partition (unless it is barred by a valid waiver). (LEG Investments v. Boxler (2010) 183 Cal.App.4th 484, 493.) Even if the property is encumbered or the property is subject to liens this right to partition still exists for all co-owners. (Lee v. National Collection Agency, Inc. (N.D. Cal 1982) 543 F.Supp. 920, 922.)
Are there instances where a co-owner can act in regard to the entire property?
A co-owner can take action for the benefit of the entire property but only for a few limited exceptions. (Gordon v. City Council (1961) 188 Cal.App.2d 680, 687.) If the co-owner is resisting intruders, evicting trespassers or removing encumbrances that is permissible. (Los Angeles Lighting Co. v. City of L.A. (1895) 106 Cal. 156, 159-160.) The purpose behind this is to enable all co-owners to protect the property from injury or loss.
What are some examples of co-owners exercising rights?
For example, Julie and Shawn co-own a home. If they co-own it as tenants in common, Julie and Shawn could have bought the home with Julie paying 30% of the purchase price granting her 30% ownership and Shawn paying 70% of the purchase price granting him 70% ownership. Julie could pass her ownership share without issue by giving it to a friend. If Shawn wanted to renovate the home, he would be allowed to as well. If trespassers were coming onto the land, Shawn or Julie could react and prevent trespassing as to the entire home and the property surrounding it. If Shawn wants to sell the home after renovating it, he cannot force a sale but could start a partition action. This would cause the court to determine Shawn and Julie’s ownership interests to sell the home and divide the proceeds equitably. Shawn or Julie would not be able to force a sale outside of a partition action.
If Julie and Shawn were in a romantic relationship, they might choose to buy the home as tenants in common. This means even if Julie paid only 30% of the purchase price, her and Shawn would hold 50% interests in the home. As joint tenants this would also come with the right of survivorship so if Julie died, her interest would pass to Shawn. If Julie wanted to convey her half of the home to a friend, the joint tenancy would be severed. This would make Shawn and the new owner tenants in common. If Julie wanted to sell the home entirely, she would need to begin a partition action. Shawn or Julie would not be able to force a sale outside of a partition action.
If Julie and Shawn were in a business partnership, partnership real estate could be sold and then distributed to remedy any debts. (Moran v. McInerney (1900) 129 Cal. 29, 31-32.) In a partnership, business considerations and how a sale might affect creditors are paramount, the ability to sell or partition a property is different than in other property ownership situations. Partition can be granted where unsecured creditors and the partners themselves will not be prejudiced or suffer serious loss. (Civ. Proc. Code § 872.730.)
Conclusion
If you are a co-owner wishing to sell your property you may need to pursue partition. At Underwood Law, our partition attorneys can help you navigate your partition action efficiently and with care. We are here to help.