How to Handle a Property Ownership Dispute?
When you own a property with one or more people, you may end up in a dispute over payment for remodeling, upkeep, rent payments from tenants, or even wanting to get rid of the property. While it is worth trying to settle these disputes out of court, if they escalate you may want to consider litigation.
What is an Action to Quiet Title?
Under any form of property ownership an owner may bring an action to quiet title where ownership interests are being disputed. This allows them to target any adverse interests to the property. This type of claim allows an owner to “establish an interest in real property as against all existing adverse claims or clouds on title.” (Paterra v. Hansen (2021) 64 Cal.App.5th 507, 532.) In doing so they must prove their title or ownership of the property. (Pacific States Savings & Loan Co. v. Warden (1941) 18 Cal.2d 757, 759.) A partition action incorporates this determining of interest but goes even further by then dividing or selling the property.
Under California’s Evidence Code, the person with legal title to the property is presumed to be the owner, absent clear and convincing proof otherwise. (In re Brace (2020) 9 Cal.5th 903, 914.) But, in a quiet title action, the plaintiff must sue unnamed defendants because they are broadly establishing their right to the property. A successful suit for quiet title applies even against owners they might not know about. A quiet title action is binding on the defendant but also the nonparties to the suit. (Nickell v. Matlock (2012) 206 Cal.App.4th 934, 944.) That said, the owner bringing suit does need to reasonably and diligently try to find all potential defendants. (Donel, Inc. v. Badalian (1978) 87 Cal.App.3d 327, 332.)
What is a Partition Action?
A partition may encompass a quiet title action. A partition action arises when co-owners cannot agree on what to do with a property. It is also an appropriate solution when an owner wishes to dispose of their interest in property, but the other co-owners do not want to buy him out of his interest. All owners are entitled to the right to partition. (Civ. Proc. Code § 872.710 subd. (b).) A partition action always offers the opportunity for a buyout. It also settles the interests of each owner. This is why quiet title actions are brought in tandem with a partition action.
Three types of partition are available to co-owner: (1) partition in kind (2) partition by sale and (3) partition by appraisal. The type of partition pursued is usually based on the ownership interests of the parties and what type of property it is. Partition in kind may not be possible where the property cannot be physically divided. (Butte Creek Island Ranch v. Crim (1982) 136 Cal.App.3d 360, 365.)
Usually if any individual owner has encumbrances or debts tied to the property those follow their interest, but if the debt is so big it may impact the ability to sell the property. (Dang v. Smith (2010) 190 Cal.App.4th 646, 660–661.) However, owners are still entitled to the right to partition even if the property is subject to a lien or easement (Gardiner v. Cord (1908) 145 Cal. 157, 164-165; see Anaheim Union Water Co. v. Ashcroft (1908) 153 Cal. 152.)
What is a Slander of Title Action?
An owner can bring a slander of title action when another owner disparages their title. This is like a slander or defamation action but having to do with property. A successful claim requires a publication without privilege or justification that is false and causes direct and immediate pecuniary loss. (Klem v. Access Ins. Co. (2017) 17 Cal.App.5th 595, 612.) The disparagement must happen when the owner affected actually own a portion of the property. (Slusher v. Buckley (1959) 174 Cal.App.2d 324, 332.) The owner must also experience financial loss as a result. This would happen if someone posted a sign on the property next to the plaintiff’s home stating anyone buying the plaintiff’s property is buying a lawsuit. (Phillips v. Glazer (1949) 94 Cal.App.2d 673, 677-678.) This type of action allows an owner to defend against other parties attempting to decrease their property value or prevent its sale.
What are Some Examples?
For example, Shawn and Julie are brother and sister who bought an apartment building as a shared investment. They bought this building as co-owners or tenants in common with both of them holding 50% shares in the building.
If Shawn was collecting rent from tenants and refusing to split the rent money with Julie that would likely cause a dispute. Julie could try to settle this out of court because it is a minor dispute. However, if it escalated and led to a breakdown in Shawn and Julie’s relationship, they may need to begin a partition action, so they no longer needed to interact about the property. The court would determine their interests and the rents owed. The court would then likely order a sale and divide the sale proceeds according to Shawn and Julie’s interests in the property.
Alternatively, Shawn or Julie might try to claim they had more of an interest in the property. Julie could begin an action to quiet title. She would need to inform Shawn of this action and find any other potential defendants. If she succeeded in quieting title and an estranged relative came out of the woodwork claiming an interest in the property, her interest would be protected.
For example, Shawn and Julie own a home as joint tenants and want to sell the property.
If Alex lived next door and was trying to prevent them from selling the house and put a sign on his property telling buyers not to buy it or alleging it had black mold Shawn or Julie could bring an action for slander of title. As long as they are both owners and what Alex’s sign said was false, they would be able to bring this action. Any depreciation in sale value of the home or loss of offers would qualify as financial loss.
Conclusion
The best way to handle ownership disputes is to talk with your co-owners and try to reach an agreement outside of court. If it is something simple like how you are using the property or how you are distributing rents it is easier and less costly to talk this out outside of litigation. If the dispute escalates or ends in wanting to dispose of the property, partition is a good option. If title to property is a point of contention, partition may be a solution. At Underwood Law, our partition attorneys can help you navigate your partition action efficiently and with care. We are here to help.