California Partition Law Blog
In a partition action the sale proceeds are distributed based on a party’s interest in the property. (Code Civ. Proc., § 872.810.) This includes parties’ ownership interest as well as what improvements they made on the property or other factors. (Code Civ. Proc., § 873.220.) In pursuing partition by sale, division of proceeds may raise questions for owners as to what they can collect. Depending on how the property was used, one co-owner may have a claim against the other for rent.
Why a co-owner may claim they are owed rents:
Under the partition statutes, the court may allow an accounting or other adjustments to compensate co-owners under principles of fairness. (Code Civ. Proc., § 872.140.) Under these compensatory adjustments one co-owner may claim they are owed rents by the other co-owner.
Properties in partition actions are frequently held in joint tenancy or as tenants in common. Both forms of ownership allow one owner to be in possession of the property with the other “out-of-possession.” Just because one owner does not live on the property does not affect their interest.
Property that is rented out to a third person, so someone other than the co-owners, produces rent collected by the owners. If only one of those owners was collecting the rent, the other co-owner will have a claim for a portion of that rent.
However, one co-owner does not have a claim for rent if the other co-owner was living on the property. For example, a co-owner out of possession cannot try to collect rent against another cotenant in exclusive possession of the property. (Teixeira v. Verissimo (1966) 239 Cal.App.2d 147, 155.) This also means a cotenant out of possession is not required to help the cotenant in possession make payments while that cotenant asserts exclusive ownership. (Regalado v. Regalado (1961) 198 Cal.App.2d 549, 552.)
Cotenants cannot collect rent from each other because as cotenants and thus co-owners they are both equally entitled to share the possession of the entire property. This also means another owner can exclude the other from the property. (Zaslow v. Kroenert (1946) 29 Cal.2d 541, 548.)
If one co-owner did try to exclude the other this would constitute ouster. To cause ouster the excluding co-owner must affirmatively and clearly exclude the other owner from entering or possessing the property. This is to say, just because one co-owner is living by himself on the property does not mean the other owner has been ousted. (Estate of Hughes v. Ben G. Patton (1992) 5 Cal.App.4th 1607, 1611.)
Why a co-owner likely cannot recover rents
The Third District Court of Appeal’s decision in McWhorter v. McWhorter clearly established the inability to collect rent just because one cotenant was in sole possession. ((1929) 99 Cal.App. 293, 296.) Specifically, this applies in an action for partition between cotenants. This means rent can only be collected by a cotenant if the property was leased to a third party.
An exception to this rule has been carved out where there is a specific agreement between cotenants. There must be an agreement, so a party cannot collect rent where the party in possession never collected rent. (Hunter v. Schultz (1966) 240 Cal.App.2d 24, 30–31.) This means even if a co-owner’s family member lived on the property if that co-owner never collected rent the out of possession co-owner would be unable to collect rent.
A co-owner may have a claim against an in-possession owner if that in-possession owner seeks contribution for improvements made or other costs incidental to the property calculated by reasonable rental value. (Hunter v. Schultz (1966) 240 Cal.App.2d 24, 30-32.) The owner out of possession can defensively assert that as an out of possession owner they do not need to pay the tenant in possession those “rents.” This means the owner in possession cannot claim “offsets” from the co-owner out of possession.
In a partition action where there was an actual rental agreement the co-owner can collect rent. (Wallace v. Daley (1990) 220 Cal.App.3d 1028, 1028.) The cotenant out of possession can recover a portion of rent minus the taxes and repairs for the preservation of the property. (Goodenow v. Ewer (1860) 16 Cal. 461, 472.) In referencing rents and determining amounts owed courts always consider an actual and measurable amount. The level of specificity required to have a claim for rent payment must be something like an agreement in writing between parties to pay for one half of $30 per acre per year. (Nevarov v. Nevarov (1953) 117 Cal.App.2d 581, 584–585.)
What would co-owners attempting to collect rent look like?
For example, Julie and Shawn co-own a single-family home as tenants in common. This means Julie and Shawn both have the right to occupy this home by themselves with no detriment to the other co-owner. If Julie lived on the property by herself, Shawn would not be able to collect rent from her. Just because Julie is exclusively occupying the single-family home does not mean she has ousted Shawn. If Julie changed the locks on all the doors, put Shawn’s belongings out on the curb, and would not let him in that would constitute ouster. Then Shawn would have a claim for ouster and the ability to claim rents (reasonable rental value of the home) during the time Julie had ousted him. If Shawn and Julie sought partition of the home, Shawn could incorporate his claim for rents by ouster if Julie had in fact taken those actions.
If Julie let her mom live in the house for free, Shawn could not collect rent. Just because someone other than Shawn or Julie was in possession of the house does not entitle either Shawn or Julie to rent. Where rent was not being collected and there was no rental agreement, Shawn would not be able to collect rents from this time period in a partition action.
If Shawn and Julie were co-owners but Julie was renting out the property to her friend Ruby, Shawn may have a claim against Julie for rents. Julie collects monthly rent from Ruby worth $1,500. Shawn has a claim for half of the rent payments (minus taxes and upkeep expenses). In a partition action, Shawn is entitled to half of the rent payments for the amount of time Ruby lived in the house. Of course, Shawn is entitled to the rent payments if Julie did not already split them with him.
Finally, if Julie lived in the house alone, she could try to get Shawn to pay for improvements made on the house as part of the partition action. This is likely to fail. The court would likely divide the proceeds in light of her improvements to the house, but it would not require Shawn to pay Julie.
The Underwood Law Firm has a team of experienced lawyers who can help resolve your property ownership interest disputes at trial and help you pursue solutions like partition actions. We are here to help.