Code of Civil Procedure (CCP) section 872.840 - Property Subject to Express Trust and Duty of Trustee

The California Partition Law begins at Code of Civil Procedure section 872.010 and ends at Code of Civil Procedure section 874.323. Section 872.840 outlines what courts can do in partition lawsuits when an interest of the property is subject to an express trust. This statute is important because property interests are commonly held in trusts, which may affect the partition.

Code of Civil Procedure section 872.840 states

(a) Where the property or an interest therein is subject to an express trust, the court may, in its discretion, order that the property be sold.

(b) Upon division or sale of such property, the property or proceeds of sale allotted to the trustee of the express trust shall be held by him upon the trust therein stated, and no further action by the court pursuant to Section 873.840 is required.

(Amended by Stats. 1976, c. 73, p. 110, § 6.)

“Shawn” and “Julie” are an unmarried couple. They decide to buy a nice home as tenants in common and move in together. They each own one-half interest in the property.

Shawn creates a trust with himself as the trustee and his siblings as beneficiaries. He decides to transfer his one-half interest in the property into the trust.

Unfortunately, Shawn and Julie’s relationship deteriorates, and they break up. They cannot agree on what to do with the property. Julie wants to sell the property and move on with her life, so she sues for partition by sale.

Eventually, the court uses its discretion and rules for a partition by sale. After the property is sold, Shawn’s receives his share of the sale proceeds as a trustee, pursuant to CCP § 872.840. The court is not required to take any further action.  

1976 Addition

Section 872.840 continues the substance of the second paragraph of former Section 763.

Per usual, section 872.840 does not include an “official” comment from the California Legislature governing its application. Instead, the Assembly Committee impliedly endorses the Revision Commission above, as the Legislature substantially endorsed an overall adoption of the Law Revision Commission suggestions when it passed the new partition statutes in 1976.

In fact, the introduction to Assembly Bill 1671 (the bill that contained the new partition laws) states that the Revision Commission’s recommendations “reflect the intent of the Assembly Committee… in approving the various provisions of Assembly Bill 1671.” This demonstrates that the intent of the Legislature was equally in line with that of the Revision Commission.

As to the comment’s substance, it provides that it continues a portion of former Section 763. Before it was replaced, the relevant part of Section 763 provided:

“Where the property or an interest therein is subject to an express trust the court, notwithstanding the foregoing provisions of this section respecting property subject to a life estate and contingent remainder, may but shall not be required to order a sale thereof; and in the event of either a partition or sale, the property or proceeds of sale allotted to the trustee of such express trusts shall be held by him upon the trustee therein stated, and no further action by the court pursuant to Section 781 of this code shall be required.”

Naturally, the archaic language made this statute confusing and unwieldly in modern practice. Now, though, this statute is largely self-explanatory.

Subdivision (a) provides that a court can allow a partition of trust property to proceed in its discretion. This simply implies that there are certain situations where partition of trust property would be inadequate, or even unlawful. For instance, a trust expressly providing that the home is not to be sold would seemingly inoculate the property from the possibility of partition, absent concurrent actions from all the beneficiaries.

Subdivision (b) plays little function other than to remind the courts that trust administration isn’t their job, even if a probate court is the one overseeing the partition. As such, liquidating a trust asset means the funds go to the trustee to distribute as he is either permitted or required to do under the terms of the trust.

Though the comment makes no mention of this, subdivision (b) also ensures that various courts do not step on each other’s toes, so to speak. The “internal affairs” of trusts are matters within the exclusive jurisdiction of the probate courts. (Estate of Heggstad (1993) 16 Cal.App.4th 943, 951.)

As such, it would be impermissible for an ordinary civil court to hear beneficiary complaints on trustee distribution, or for the court to instruct the trustee on the correct distribution. Instead, the trustee controls the sales proceeds to distribute under the terms of the trust.