Code of Civil Procedure (CCP) Section 873.850 – Where Proceeds Have Not Been Allocated Between Parties

Code of Civil Procedure section 873.850 is a jurisdictional statute that allows for the court to continue to oversee the action after the property is sold, but where the parties to a partition have not agreed upon how the proceeds from the sale are to be distributed.

Code of Civil Procedure section 873.850 states:

When the proceeds of the sale belonging to persons who are parties to the action, whether known or unknown, have not been allocated among such parties, the action may be continued as between such parties, for the determination of their respective claims thereto, which must be ascertained and adjudged by the court. Further testimony may be taken in court, or by a referee, at the discretion of the court, and the court may, if necessary, require such parties to present the facts or law in controversy, by pleadings, as in an original action.

“Shawn” and “Julie” are siblings who inherit a farm from their grandfather. 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. The court allows the partition to go through, and the farm is eventually sold to a third-party buyer.

Under section 873.840, the court has two options. First, it can value the life estate and reversionary interests of Shawn and Julie, and distribute the funds accordingly. Or second, it can establish a trust to pay the father portions of the sales proceeds for the rest of his life. This second option is in the discretion of the court.

1976 Addition.

Section 873.850 continues the substance of former Section 774.

As is the case for many of the partition statutes, section 873.850 does not include an “official” Assembly Committee Comment from the California Legislature. But this is the norm. And 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 essentially in line with that of the Revision Commission.

As to the comment, it references that Section 873.850 continues the now-repealed former section 774. That section provided:

“When the proceeds of the sale of any share or parcel belonging to persons who are parties to the action, whether known or unknown, are paid into the courts, the action may be continued as between such parties, for the determination their respective claims thereto, which must be ascertained and adjudged by the court. Further testimony may be taken in court, or by a referee, at the discretion of the court, and the court may, if necessary, require such parties to present facts or law in controversy, by pleadings, as in an original action.”

In practice, this statute is often invoked, yet is a staple of partition litigation. Think of it as operating in the background once the sale of the property occurs.

What it does is allow for continued litigation on how the proceeds are to be distributed between the parties, even though the property has sold and the proceeds are ready to go.

The need for continued litigation might seem confusing at first, but it is often necessary because “every partition action includes a final accounting according to the principles of equity for both charges and credits upon each cotenant's interest. Credits include expenditures in excess of the cotenant's fractional share for necessary repairs, improvements that enhance the value of the property, taxes, payments of principal and interest on mortgages, and other liens, insurance for the common benefit, and protection and preservation of title. (Wallace v. Daley (1990) 164 Cal.App.3d 1028, 1036.)

As such, section 873.850 allows for the continued litigation of these issues to ensure that each party receives the share they are entitled to under the principles of equity.

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.