There are many different ways you can “win” a partition action, and it all depends on what “winning” looks like to you. Because Partition is an action rooted in equity or fairness you may desire a different outcome than someone else with a similar case. As such, it is important to know what your goal is going into a partition lawsuit.
What if you want to sell your property?
Getting a partition action to sale is an important goal if you want the lawsuit to end with you selling the property. The court must grant the sale of the property, usually requiring you to show ownership and have the other side agree or concede to sale. A partition action is likely to result in a sale by either private sale or public auction. Either option will allow members of the public to have an opportunity to bid on the property. (Cummings v. Dessel (2017) 13 Cal.App.5th 589, 600.)
An open-market sale, also referred to as a private sale, is the most common method of sale in a partition action. provided and informs the public where offers can be submitted. (CCP §§ 873.650, 873.680.) This is to say, the sale is not restricted to only owners of the property. Once the sale has been finalized the proceeds are divided among the parties in proportion to their ownership shares as determined by the court. (CCP § 873.820)
What if you want to be compensated for what you’ve paid into the property?
If you want to be compensated for any money you have put into the property, partition is a good solution for you. As an equitable action, partitions are conducted with fairness in mind. (CCP § 872.010.) This means what you get “out” of the action is fair based on what you put in. All partitions have an accounting process. In an accounting, the court will adjust the compensation of an owner according to their contributions and equitable principles. (CCP § 872.410.) This occurs following the sale when the proceeds are distributed. Where there may be uneven amounts, the accounting ensures the distribution is done fairly. For example, if mortgage payments were made unequally, or if you paid for repairs, taxes, insurance, or other improvements, the accounting considers those contributions. (Wallace v. Daley (1990) 220 Cal.App.3d 1028, 1035–36.)
Depending on the nature of the property, it may also be divided physically. Even if the property is partitioned physically, you may be able to recover money. If there is an unequal division of property, one owner may owe another a sum of money based on the value of the property. (Jamison v. Jamison (2008) 164 Cal.App.4th 714, 720; CCP § 873.250.) The court will determine this as part of the judgment entered for partition. If the other owner owes a debt or obligation as a result of the judgment, that owner can have a lien placed on their part of the property to remedy this inequity as well. (Rich v. Smith (1915) 26 Cal.App. 775, 779.)
What if you want to rent the property?
As an owner, prior to and after a partition action, you have the right to rent out the property. Following a partition action, you may still be able to rent the property if you still have an interest in the property. All owners, and leasing owners, have the right to occupy the property or lease their right to occupy. (Verdier v. Verdier (1957) 152 Cal.App.2d 348, 352.) An owner acting as a lessor is entitled to collect rent from a tenant under a lease agreement. (In re Knox’ Estate (1942) 52 Cal.App.2d 338, 354.) However, the lessor-owner is also obligated to share the rent proceeds with his other owners “in accordance with their respective percentages of ownership.” (Garcia v. Andrus (9th Cir. 1982) 692 F.2d 89, 92.) As such, it depends on what your ownership situation is. However, if you are an owner, another owner cannot attempt to claim rent from you if you were living on the property. (Teixeira v. Verissimo (1966) 239 Cal.App.2d 147, 155.)
What if you want to keep the property for yourself?
As an owner, if a co-owner brings a partition action for sale and you do not want to sell, you have the right to a buyout under the Partition of Real Property Act. (CCP § 874.317.) The court will determine the value of the property before the buyout takes place. This allows you to buy out another owner’s interest and keep the property all for yourself. This can also help preserve the value of the property and reach a solution faster than a sale.
Another defense to a partition sale, is if there was a waiver of the right to partition. Owners can waive the right to partition through an express or implied agreement. (CCP § 872.710(b); Orien v. Lutz (2017) 16 Cal.App.5th 957, 962.) To avoid a sale, you may argue that the right to partition was waived. (LEG Investments v. Boxler (2010) 183 Cal.App.4th 484.) If there is an agreement with the right of first refusal (of a sale) this may also act as a waiver, but it must specifically mention partition or waiver. (American Medical International, Inc. v. Feller (1976) 59 Cal.App.3d 1008, 1014.)
What would an example of winning a partition action look like?
For example, “Shawn” and “Julie” own a home in equal one-half shares as co-tenants. If both Shawn and Julie wanted to go through with a sale, the property would be put up for public auction or private sale. If Shawn really wanted a public auction, he would likely need to show the court why this would be more beneficial to Julie and him, as opposed to a private sale. Otherwise, Shawn and Julie could both win by having the property sold and receiving their interests via the distribution process.
If Julie had contributed to an addition to the property and paid for some remodeling, getting those contributions back would be a win for her. Following a sale, these contributions would be factored into the accounting and would be included in the amount she received in the distribution phase after the sale.
If Shawn had rented out the property prior to partition, Julie could also seek a portion of rent payments equivalent to her interest in the property. She would only receive this if the property was rented to a third party. She could not collect rent from Shawn himself.
If Shawn or Julie held onto the property as opposed to selling it, they could rent out the property following the conclusion of the partition action.
To hold onto the property, Shawn or Julie would have to buy out each other’s interest. If Shawn wanted to use the property to generate rental income, he could buy out Julie’s half interest. This would allow Julie to be fairly compensated for her interest, a win for her, while allowing Shawn to keep the property, a win for him.
Conclusion
If you think you may have a partition action and know what “winning” would look like for you, at Underwood Law, our partition attorneys can help you navigate your action efficiently and with care. We are here to help.
