Code of Civil Procedure (CCP) Section 874.321 – Filing Report for Open-Market Sales

Section 874.321 is an important section of the partition statutes because it governs filing reports in open-market sales. This means a broker, also called a referee, is appointed to conduct the open-market sale must file a report with the court ensuring the court is aware of the details of the sale and to ensure the value for which the property sold is fair.

Code of Civil Procedure section 874.321 states:

1. A broker appointed to offer property for open-market sale shall file a report with the court not later than seven days after receiving an offer to purchase the property for at least the value determined under Section 874.316 or 874.320.
2. The report required by subdivision (a) shall contain the following information:
   1. A description of the property to be sold to each buyer.
   2. The name of each buyer.
   3. The proposed purchase price.
   4. The terms and conditions of the proposed sale, including the terms of any owner financing.
   5. The amounts to be paid to lienholders.
   6. A statement of contractual or other arrangements or conditions of the broker's commission.
   7. Other material facts relevant to the sale.

This section is similar to section 11 of the Uniform Partition of Heirs Property Act. This section of the statute was amended in 2022, and the new version made effective as of January 1, 2023. This amendment deleted “appointed to offer heirs property” from subdivision (a), changing it to “appointed to offers property.” This reflects the amendments of all the partition statutes to apply more widely to not just heirs’ property interests.

In Massachusetts, the judge similarly will make sure the value of the property being old was appropriate and for the seller to report back if the property was unable to be sold at the designated price. (Morgan v. Jozus (Mass. App. Ct. 2006) 67 Mass.App.Ct. 17, 23.) Like in California, certain aspects of the sale are not left to the broker or as Massachusetts calls them a “commissioner.”

Similar to California, in New York, a referee can appraise a property and put it on the open-market to be sold in accordance with its appraised value. (Lauriello v. Gallotta (N.Y. App. Div. 2010) 70 A.D.3d 1009, 1009.)

Texas also requires the broker to file a report of sale within seven days of the sale. (Rogers v. Coslett (Tex. App. 2022) 646 S.W.3d 1, 9.) The Texas statute Tex. Prop. Code Ann. § 23A.011 is essentially identical to the corresponding section of the California statute.

The Partition of Real Property Act was an outgrowth of a law review article titled Historic Partition Law Reform (2019) Texas A&M Legal Research Paper Series No. 19-27 by Thomas W. Mitchell (“Law Reform”). (see also Thomas W. Mitchell, Reforming Property Law to Address Devastating Land Loss, 66 Ala.L.Rev. 1, 9, 29 (2014) (“Reforming Property Law”).

Previously, in a number of states, a court could grant one or more of the parties the opportunity to buy out, at a price determined by the court in most instances, some or all of the ownership interests of another cotenant. (see Reforming Property Law, p. 13.) Though often alluded to as a buyout remedy, this remedy is also referred to as partition by allotment in a few jurisdictions. (Id.) The states that provide for buyouts view such buyouts as more consistent with the preference for partition in kind than with partition by sale of the entire property at public auction, even though one or more cotenants may have their interests liquidated against their will. (Id.)

Previously, advocates “overestimated the degree to which partition sales have been a source of black land loss.” (Thomas W. Mitchell, Destabilizing the Normalization of Rural Black Land Loss (“Destabilizing”), 2005 Wis. L. Rev. 557, 581 (2005); see Faith Rivers, Inequity in Equity (Temp.Po.&Civ.Rts.L.Rev. 2007) 1, 31 (“There is little empirical data documenting claims of African-American land loss” [due to partitions].) (“Inequity”).) Others have claimed that low will-making rates for African-Americans represent a present day manifestation of the ways in which African Americans after the conclusion of the Civil War were deprived of access to attorneys and even to basic information about estate planning, but this theory has not been verified in any meaningful way. (see Law Reform p. 68.)

In recognizing that partition by sale sometimes will the most equitable in some partition actions, the Act seeks to ensure that any partition sale that may occur ends up yielding a sales price that maximizes the economic return for heirs’ property owners, thereby preserving as much of the real estate wealth of these families that was associated with their heirs’ property ownership. (see Law Reform, p. 74.)

The Partition of Real Property Act seeks to address consequences of this type of property ownership, and which California adopted in 2022.

For example, “Julie” and “Shawn” have agreed to have a broker named “Mike” put in charge of the open-market sale of their property in a partition lawsuit. If the property sold, Mike would need to file a report with the same court handling the case within the next seven days. Mike’s report would need to have a description of the property, the proposed price, the name of the buyer, terms and conditions, and any other material facts. If Julie or Shawn had a lien on the property, the amount being paid to those lienholders would need to be stated on the report. This allows the court to be fully informed of the sale and make sure it was conducted according to partition statutes. This report also protects the new owner of the home confirming they bought the property.

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.