CAN YOU FORCE THE SALE OF CO-OWNED PROPERTY?
CO-OWNERS HAVE THE ABSOLUTE RIGHT TO PARTITION IN CALIFORNIA
In California, the right to partition property is absolute, subject to very minor exceptions. In other words, a co-owner of property can force the sale of that property, or force the buyout of their interest in the property. This is true even for owners who have a smaller interest in the property than others.
For example, five siblings inherit a property. Initially, each has a 20% interest in the property. However, one sibling then acquires the interest of three others, giving that sibling 80% of the property. Now, there are two co-owners, one with 80% and the other with 20%. The 20% co-owner still has a right to partition. A partition action will always result in a forced sale or buyout. Unless the property can be physically divided, the 20% co-owner is entitled to force a sale or buyout, and the 80% co-owner has no defenses.
Although partition is regarded as an “absolute” right, there are exceptions. Community property cannot be partitioned. The right to partition can also be waived by either express or implied agreement. Waiver can be written or oral, but proving an oral waiver will almost certainly be difficult. California Courts have found a waiver of the right to partition where parties to divorce actions entered into property settlement agreements allowing one spouse to live in the property for life or until remarried. However, even life and remainder estates can be partitioned in the right situations.
California Courts have also found a waiver of the right to partition in certain situations where co-owners also run a business on the property or land. See below under COMMON PARTITION SITUATIONS–Forcing the Sale of Co-Owned Investment Property
WHAT IS THE PROCESS FOR FORCING SALE OF JOINTLY OWNED PROPERTY?
You will want to first send a demand to sell or buy out your interest. If the co-owner or co-owners don’t comply, then a partition lawsuit should be filed. The lawsuit essentially asks the court to force the sale or buyout. And, as discussed above, the right to force this sale is essentially absolute in California.
Once the lawsuit is filed, the co-owner or co-owners that previously refused to sell may come to their senses. Depending on what you are dealing with, it may be smart to attempt to gain their cooperation even though they were uncooperative previously. If they still don’t cooperate, however, the partition case must be pursued. This involves getting the court to issue an order, also called a judgment, forcing the co-owners to buy your share, and if they don’t, to sell the property and split the profits. This order, in almost all cases, can be obtained without the need for trial. A motion will need to filed to get the order, and different courts and judges have different requirements on what is needed, but the good news is that you can get this without a trial.
The court will appoint a “referee” to oversee the process. Click here for more information on what a referee does. The property will then be sold, and the proceeds will be divided according to ownership interests, and also subject to potential offsets for debits and credits.
Anand Law can assist with the entire process, including initial demands, negotiating before and after a lawsuit, pursuing the lawsuit, and accounting for the amounts you are owed for any expenses and costs you have incurred. We are experienced with dealing with all sorts of co-ownership situations, and understand the mentality of co-owners that don’t want to sell. We also are experts in the law related to partition actions, and in accounting, which allows us to ensure that you get every penny you are entitled to.
WHAT HAPPENS AFTER THE PROPERTY IS SOLD?
After the property is sold, the Referee will typically attempt to get the parties to agree on a final accounting and distribution of proceeds. This takes the form of a stipulation, which is then filed with the Court and signed off on by the Judge. However, if the parties cannot agree, the Referee and/or the parties may file motions or other requests, and the Court will have to make determinations as to accounting issues.
For more information on the Distribution of Proceeds after a Partition Sale, click here.
HOW LONG DOES A PARTITION ACTION TAKE?
The time of a partition action varies depending on a variety of factors. Typically, however, we see partition cases resolve in 6 to 12 months. Some cases take less time, and some longer. The most significant factors that determine how long a partition action will last are:
How cooperative or resistant are the co-owners, and are they able to successfully stall the partition case?
The number of co-owners may play into this. As will the history of co-ownership, and any disputes as to value. If co-owners begin to cooperate after a partition case is filed, an agreement can be reached where the case ends in less than 6 months. If owner’s are resistant, they can cause delay, but Anand Law’s experienced partition attorneys will not let any co-owner (whether they are represented by an attorney or not) stall the process for long. We have seen every trick under the sun, and any attempt will only last so long, as the inevitable outcome is that the Court will order a sale of the property (unless a co-owner buys your interest out at a fair value first).
What court and judge is handling the case?
Every court house, and every judge, has a different schedule, and their availability (or lack of) can vary considerably. Unfortunately, this factor is somewhat out of any party’s control. However, Anand Law is experienced in litigating cases from Sacramento to San Diego, and beyond. We have been in front of many different judges, in many different counties and many different courthouses. We know how to push a case forward as expeditiously as possible.
Is there a disagreement as to ownership?
If the co-owners disagree as to the ownership interests of each, this can cause additional time. However, it is usually quite straightforward as to what the percentage ownership interests are. Only in rare cases do parties have legitimate disputes as to the ownership interests, and in these situations, the case may take somewhat longer. Most cases, however, have ownership interests that are not in dispute, or where any dispute is easily overcome.
Accounting issues
After the sale of the property, typically the appointed referee is in charge of accounting for fees and costs, expenses and liens. If the parties have a convoluted ownership history, this may take a longer time. For example, if one party was collecting rents from multiple tenants for many years, there may be disputes. Anand Law has experienced attorneys and accountants that can expedite this process, as we are able to take complex and voluminous information, and present it in a simple, straightforward, and convincing manner.
COMMON PARTITION SITUATIONS
The need for a partition often arises in situations where there is a divorce or other break up or after a death where multiple parties have an inherited interest and are in disagreement as to their interests or how to divide them. It may also occur when multiple parties own a property that only one of them is living in.
Typical scenarios where partition is needed include:
- Divorce
- Couple breakup, former boyfriend and girlfriend, other romantic relationship
- Parents and children
- Inherited property (siblings and other family members)
- Co-ownership by cousins, aunts and uncles
- Co-ownership by friends
- Co-ownership by investors and former business partners
Forcing the Sale of Inherited Property
Property inherited (by will, trust or through the intestate probate process) often results in co-owners that do not actually want to own property together. Often one party lives in the property, and the others do not. Or, one party begins collecting rents and basically takes over the property and treating the others unfairly. We have seen countless variations on these scenarios. Ultimately, one or more co-owners are not getting their fair shake, and it only makes sense to force a sale of the property so that they can get the percent they are entitled to.
Forcing the Sale of Property after a Divorce
After divorce proceedings, the couple that split still sometimes co-own property. In some cases, it was a rental or income property that the parties thought could be co-owned and the money split. But then one co-owner starts acting unfairly. Or the parties then have different opinions on how to manage the property, what to charge for a new lease, or whether or not to sell. Usually, property jointly owned after a divorce needs to be partitioned. It is simply not worth it to co-own the property, when you can sell it, collect your fair share, and be on your way to living a more peaceful life.
Forcing the Sale of Co-Owned Investment Property
If property was purchased by investors solely to flip, rent out, or use as income property, the partition process will be relatively straightforward. If investors co-own a property, they have partition rights just like any other co-owners. This means that any co-owner investor, whether they have a smaller or bigger share, can force the sale of the property, or the buyout of their interest.
However, if a business—other than one that involves solely leasing the property—is involved, the situation may be considerably more complicated. For example, in certain situations where owners/business partners had agreements as to how they were going to use the land for business, California courts have found a waiver of the right to partition. Other specific situations where California Courts have found a waiver of the right to partition include: where the co-owners have an active operating agreement to use the land to run an oil business; where there was an agreement to provide continuous income to investors under a long term lease. Essentially, if owners have an operating agreement or other business contract where they have decided how to use the property, a Court may find that they have agreed not to partition the property.
Each situation is unique, and a thorough understanding of all California cases is necessary to evaluate your situation and make the best possible decision as to how to proceed. Anand Law’s attorneys are partition lawyers and business lawyers. We have a deep understanding of partition laws, and also of business agreements (such as operating agreements, joint venture agreements, license agreements, by laws and resolutions).
See more:
Partition Law Past and Present: The Partition of Real Property Act and its Predecessor The Uniform Partition of Heirs Property Act
What is a Partition Referee?
Distribution of Proceeds from a Partition Sale: Expenses, Costs, Fees, Liens…and Adjustments Based on Equitable Considerations
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ANAND LAW is composed of attorneys, accountants, and real estate brokers. We represent parties in partition cases where we resolve co-ownership disputes throughout California, from San Diego to Sacramento, and beyond–including in the cities and areas of Los Angeles, Pasadena, Arcadia, Burbank, La Canada Flintridge, Covina, West Covina, Downey, Santa Monica, Glendale, Eagle Rock, Hollywood, Atwater Village, Echo Park, Glassell Park, Loz Feliz, Silverlake, Highland Park, Boyle Heights, Hancock Park, Cheviot Hills, Koreatown, Miracle Mile, Mid City, Venice, Van Nuys, Encino, Studio City, Sherman Oaks, Panorama City, North Hills, West Hills, Thousand Oaks, Calabasas, Granada Hills, Long Beach, Glendora, Anaheim, Inglewood, Santa Ana, Beverly Hills, Pomona, Marina Del Rey, Playa Del Rey, Mar Vista, Culver City, Cheviot Hills, Holmby Hills, Westchester, El Segundo, Hermosa Beach, Redondo Beach, Manhattan Beach, Huntington Beach, Orange, Irvine, Costa Mesa, Newport Beach, Moorpark, Fresno, Stockton, San Francisco, Berkeley, Oakland, Petaluma, Marin, Sausalito, Mill Valley, Tiburon, Daly City, Fremont, Stinson Beach, Redwood City, Berkeley, San Leandro, Napa, Santa Rosa, Costa Mesa, Huntington Beach, Santa Ana, Laguna Beach, Laguna Nigel, San Clemente, Ladera Ranch, Tustin, Lake Forest, Mission Viejo, Coto De Caza, Rancho Santa Margarita, Laguna Hills, Corona Del Mar, Carlsbad, La Jolla, Encinitas, Vista, Del Mar, Chula Vista, and communities throughout Los Angeles, Orange, Santa Barbara, Riverside, San Bernardino, San Luis Obispo, San Diego, Ventura, San Francisco, Alameda, and Mendocino Counties.
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