Purchasing real estate can be a rewarding investment. Unfortunately, purchasing a home or business alone may be financially overbearing, and coupled with the unstable economy, the responsibility of sole ownership can be overwhelming. This is when a partnership interest in a property becomes financially appealing. With this in mind, you and your most trusted friend decide to purchase real estate together, or perhaps you and your three siblings have inherited your deceased parents’ property. Regardless of the type of shared ownership, consider the likelihood of an exciting business venture becoming a problematic reality. Typically co-owning property is copasetic for a period of time, until a dispute arises about how to maintain and use the property. If co-owners of a property have a dispute regarding how to manage their shared property, it may be necessary to involve the court to dissolve the co-ownership. This process is known as a partition action and may be initiated by a co-owner at any time. [Refer to CCP § 872.210-872.250]
Filing a partition action
First, the partitioning party should file a Lis Pendens (notice of pendency action) at the local county recorder's office to prevent the disgruntled partner from taking out loans against the property or selling the property.
Partition in kind
This type of partitioning divides the shared property. Therefore, each owner will control a portion of the property. Due to the inevitable pitfalls of dividing and distributing property between owners, courts generally do not favor this type of partition. Permitting independent ownership of a portion of property means fair division of the property, but not necessarily equal division (this is due to the character of the property).
Partition by sale
A more routinely used option by the courts is partition by sale. This type of partitioning is achieved by the sale of the property and the division of the transaction between owners. This is most favorable by the courts when partition in kind proves to be difficult to perform.
To force the sale:
(1) The partitioning party must prove that a division of the property cannot be made, and an equal division of property is impossible to achieve.
(2) Additionally, the partitioning party must show that a division of the property would harm the value of each party’s portion. In other words, the property awarded would be of lessor value than the monies received from a sale.
One of the above-listed elements must be satisfied for the court to grant a judgment permitting the property to be sold.
If partition by sale is successful, the court has the authority to order an accounting before the proceeds of the sale are distributed to owners. The court orders accounting to fix the imbalance of contributed monies by each owner for matters such as property expenses or rents received on the property. The court will order the proceeds to be distributed proportionately.
Alternative to forced sale
A forced sale of the property can be avoided. The courts reserve the discretion to permit the owner who is opposing the partition to buy out the owner who initiated the partition.
Partition through settlement agreement
Filing an action in court can be costly and time-consuming. Alternatively, partition through a settlement agreement is a less costly way for the owners to come to a mutually satisfying agreement. Owners can agree to certain terms of the partition and determine a fair method of division.
How we achieve our client’s goals
Our number one priority when working with our clients is to achieve your goals. We do this with a heightened focus on dedicated, honest client service. It’s important to us that you fully understand the legal matter at hand. If you have a property dispute case, we will work with you every step of the way to settle the dispute. If litigation is necessary, we will compel the court to recognize the allegations in the complaint as to why partitioning is appropriate to protect the owners’ interest in the property.
Property litigation can be a complicated matter. If you’re currently a co-owner of a property and need assistance dissolving a dispute, please contact our office.
Fresno Branch:
466 W. Fallbrook,
Suite 102
Fresno, CA 93711
San Diego Branch:
10509 Vista Sorrento Pkwy., Suite 430
San Diego, CA 92121
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