Code of Civil Procedure (CCP) Section 873.250 – Owelty

Code of Civil Procedure section 873.250 requires compensation from one party to another party when partition by division results in an uneven distribution in value. This statute is important because this compensation may be necessary for an equitable distribution.

Code of Civil Procedure section 873.250 states

(a) Where division cannot be made equally among the parties according to their interests without prejudice to the rights of some, compensation may be required to be made by one party to another to correct the inequality.

(b) No compensation shall be required to be made to others by unknown owners or by minors unless it appears that a minor has personal property sufficient for that purpose and the minor's interest will be promoted thereby.

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

“Shawn” and “Julie” are business partners who invest in property together. They find some nice farmland to buy and invest in. They share much of the profits and expenses of the land.

While managing the property, Shawn makes several renovations to the farmland. This includes building multiple storage buildings and renovating the irrigation systems.

Eventually, Shawn and Julie’s relationship breaks down, and they want to dissolve the partnership. They cannot come to an agreement on what to do with the property. Shawn wants to continue operating his business, so he sues for partition by kind.

Shawn argues that he should be compensated because of the renovations that he alone paid for which increased the property’s value. The court orders the property to be partitioned in kind. The court finds that Julie must compensate Shawn for his renovations, since the division would otherwise not be equal.

1976 Addition

Section 873.250 continues the substance of the first sentence of former Section 792. The bar on requiring owelty of a minor applies to imposition of a lien on the share of the minor as well as to direct payment. The provision in this section for owelty of partition should be distinguished from compensatory adjustments made under the ordinary principles of equity, as for accountings, allowances, and the like, pursuant to Section 872.140.

As is the case with nearly every partition statute, section 873.250 does not include a an “official” Assembly Committee Comment from the California Legislature. But this is not unusual. That’s because the Legislature 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 substantially in line with that of the Revision Commission.

Legislative intent notwithstanding, the Revision comment references superseded section 792. Section 762 was a provision that outlined what to do in situations of unequal partitions, stating in relevant part:

“When it appears that partition cannot be made equal between the parties, according to their respective rights, without prejudice to the rights and interests of some of them, and a partition be ordered, the Court may adjudge compensation to be made by one party to another, on account of the inequality; but such compensation shall not be required to be made to others by owners unknown, nor by an infant, unless it appears that such infant has personal property sufficient for that purpose, and that his interest will be promoted thereby.

And in all cases the Court has power to make compensatory adjustment between the respective parties, according to the ordinary principles of equity.”

Commenting on section 764 the Commission stated, in relevant part:

The substance of the first sentence of former Section 792, relating to owelty, is continued in Section 873.250. The substance of the second sentence, relating to other compensatory adjustment, is continued in Section 872.140.”

Here, section 873.250 deals with the unique concept of “owelty.” It’s an outdated term, but the concept is simple enough. Sometimes, the division of co-owned land cannot be equal. This is particularly the case when the subject partition is dealing with thousands of acres of property or multiple lots.

In 1917, the California Supreme Court summed the idea quite succinctly, stating, “and in the case of considerable inequality between the shares it is usual for those cotenants who receive shares of lesser value to receive a payment from those receiving the more valuable shares, which payment is termed owelty.” (Gonzales v. Gonzales (1917) 174 Cal. 588, 595.)

For example, in a 2008 case out of the Fifth District Court of Appeal, the trial court had to divide up several thousand acres of property between two brothers. (Jamison v. Jamison (2008) 164 Cal.App.4th 714.) The court awarded four parcels to the brother named William, and eight parcels to the brother named John.

Although William received fewer parcels, the price per acre for his parcels was around $2100 per acre. John’s parcels, in contrast, were valued at only $1100. As such, William was ordered to pay owelty to John to make up for the difference in value.