Code of Civil Procedure (CCP) Section 873.780 – Court Authority at Closing

Code of Civil Procedure section 873.780 is designed to address the practical realities of property sales; that is, closing often involves minor deviations or adjustments from the agreed-upon terms of sale. Section 873.780 grants courts the ability to rule on and approve these adjustments in order to get the property sold.

Code of Civil Procedure section 873.770 states:

The court may make orders relating to the closing of a sale after confirmation, including escrow and closing provisions and, if the referee and purchaser so agree and the court upon noticed motion determines it will not result in substantial prejudice to the parties, may make adjustments varying the terms of sale based on after-discovered defects.

“Shawn” and “Julie” are an unmarried couple who want to start a life together. They find a nice home in Los Angeles and buy it as joint tenants. They move in and start their new life together.

Unfortunately, Shawn and Julie’s relationship doesn’t work out, and they break up. They cannot agree on what to do with the property. Shawn wants to sell all the property and move on with his life, so he sues for partition by sale.

Eventually, the court orders the property sold and the sale proceeds distributed. The court concludes that the property will be sold at a private sale. After the sale occurs, the court confirms the sale on noticed motion by the parties.

The closing process has now begun. This means that any title issues will need to be cleared up, and escrow terms may need to be modified. Section 873.780 gives the court the authority to rule on and approve any changes to the sales terms that need to happen in order for the sale to close.

1976 Addition.

Section 873.780 is new. It recognizes that modern transactions often involve, at closing, minor deviations or adjustments. The court is expressly authorized to make rulings regarding them.

Like with many of the partition statutes, section 873.780 does not include an “official” Assembly Committee Comment from the California Legislature. But this is not unusual. And this is 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 essentially in line with that of the Revision Commission.

As to the comment here, it simply re-iterates a long-standing principle of partition actions: courts have wide-ranging authority to issue orders and decrees to achieve the goal of partition, namely, a sale of property.

In that sense, section 873.780 falls within the scope of section 872.120, which provides:

“In the conduct of the action, the court may hear and determine all motions, reports, and accounts and may make any decrees and orders necessary or incidental to carrying out the purposes of this title and to effectuating its decrees and orders. ‘Action’ means an action for partition under this title.”

The Legislative Digest accompanying the letter to Governor Edmund G. Brown, Jr. for approval of Bill 1671 invokes the language of section 872.120. Paragraph 2 reads: “The bill grants broad statutory power to the court to hear motions, make orders and decrees and issue temporary restraining orders and injunctions. The court apparently already has such authority; this bill simply codifies it.”

In practice, section 872.120 functions to the degree acknowledged by the Digest. At its core, the statute functions to codify the court’s seemingly endless arsenal of equitable powers when it comes to partition actions.

“Equity,” is the focus, and giving the court the flexibility to make whatever orders it needs to ensures that “neither party is permitted to secure an advantage to the prejudice of another.” (Elbert, Ltd. v. Federated Income Properties (1953) 120 Cal.App.2d 194, 206.) For instance, it is this very equitable principle that has mandated final accountings in all partition actions. “Since an action for partition is essentially equitable in its nature, a court of equity is required to take into account the improvements which another cotenant, at his own cost in good faith, placed on the property which enhanced its value.” (Wallace v. Daley (1990) 220 Cal.App.3d 1028, 1036.)

As such, it is reasonable to conclude that “equity” also permits courts to vary sales terms and approve minor adjustments to ensure a sale closes.

Here at Underwood Law Firm, our knowledgeable attorneys are here to help navigate the complex web of case law and statutes surrounding partitions. If you are thinking of filing a partition, are already in the midst of a partition suit, or just have any questions, please do not hesitate to reach out to our office to learn more about Partition Law.