Code of Civil Procedure (CCP) Section 873.830 – Setoff in Lieu of Payment of Estate for Life or Years

Code of Civil Procedure section 873.830 is an incredibly unique statute that addresses a hyper-particular situation: a partition where only a portion of the property is sold, paired with the presence of a tenant on the property when that portion is sold. While the statute is seldom invoked, these situations can crop up every once and a while, and thus there is a question of what portion of the sales proceeds the tenant is entitled to recover. Section 873.830 clarifies this question.

Code of Civil Procedure section 873.830 states:

Where a part only of the property is sold, a tenant for life or years in an undivided share of the whole property may have his estate equitably set off in any part of the property not sold by way of complete or partial satisfaction of his share of the proceeds.

“Shawn” and “Julie” are siblings who inherit a farm from their grandfather. The farm is neatly divided into two plots: the plot with crops and the plot with the farmhouse. When their father loses his home, the siblings grant him a life estate in the farm. The father will be entitled to remain on the property and treat it as his own for the rest of his life.

Unfortunately, the siblings begin to feud over property taxes and other aspects related to the farm. Shawn eventually decides to sue for partition. During litigation, the parties eventually agree to sell only plot with crops.

When the crop plot sells, the father is technically entitled to some portion of the sales proceeds. Because he has a life estate, he would have been entitled to harvest those crops, and now he cannot.

But, at the same time, the father will be allowed to remain on the plot with the farmhouse for the rest of the life. So he is still getting some present value out of the property. Under Section 873.830, the father’s share of proceeds from the sale of the crop plot may be setoff by his continuous and present possession of the farm house for the rest of his life.

1976 Addition.

Section 873.830 continues the substance of former Section 770.

As is the case for many of the partition statutes, section 873.830 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 mentions that it continues the substance of former Section 770. That now-repealed statute read:

“When a part of the property only is ordered sold, if there be an estate for life or years, in an undivided share of the whole property, such estate may be set off in any part of the property not ordered to be sold.”

In practice, section 873.830 is a seldom referred-to law. Indeed, there isn’t a single appellate case interpreting its provisions, nor were there any under the former version of the statute. This is likely due to its hyper-narrow focus. It requires the incredibly unique situation where only part of the property is sold (already an extreme rarity) plus the presence of a life estate or long-term lease for a set duration.

Nonetheless, if this one-in-a-million situation were to occur, the code captions essentially state that the tenant may take a setoff in lieu of payment for the estate.

This requires an understanding of setoffs, which are already tricky legal concepts to begin with. The basic premise of the setoff is that it is a defensive claim for a defendant in a lawsuit. “One who has paid a liability in full or in part can allege that payment as a defense to a cause of action.” (Morris Cerullo World Evangelism v. Newport Harbor Offices & Marina, LLC (2021) 67 Cal.App.5th 1149, 1159.)

As a basic example, suppose Plaintiff sues Defendant for breach of contract. Plaintiff seeks recovery of the entire contract price. But Defendant has already paid 90% of it. Defendant can claim “setoff” as an affirmative defense to offset the amount of money owed to Plaintiff. (CCP § 431.70.)

Fitting this idea into the partition context is obviously not a perfect fit. But the gist would be that the tenant’s continued possession would setoff his entitlement to payment from the portion of the property that was sold.

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.