COURT-ORDERED SALES UNDER THE PARTITION OF REAL PROPERTY ACT (PRPA)

The Partition of Real Property Act (the “PRPA”) applies to all real property in California that is held by tenants in common. The only exception is if there is a written agreement governing partition to the property. The PRPA applies to all actions filed after January 1, 2023. California Code of Civil Procedure (“CCP”) Section 874.311

Under the PRPA, an option to buy out interests is provided to cotenants who did not request a sale. Pursuant to Section 874.317, the court must “send notice to the parties that any cotenant except a cotenant that requested partition by sale may buy out all the interests of the cotenants that requested partition by sale.” We refer to this notice as the “Notice of Market Value”.

After the Notice of Market Value is sent, the parties that didn’t request a sale have 45 days to make an election (that is, to file their formal notice stating they want to buy out the others’ interests). If there are defaulted parties, they also will have to be dealt with through this process, as they have interests in the property regardless of whether they are participating in the lawsuit or not—their interests must also be bought out under this court-supervised process.

If an election is made, the court must send another notice, this one stating that a party (or parties) elected to buy out others’ interest(s). We refer to this notice as the “Notice of Buy-Out Option”. The purchase price will be the market value determined by the court “multiplied by [their] fractional ownership of the entire parcel” (§874.317). This process may be quite nuanced depending on the number of parties involved. The court must set a date, no sooner than 60 days from the “Notice of Buy-Out Option “by which electing cotenants shall pay their apportioned price into the court.” §874.317. This process can have various twists and turns depending on the factors including differences in opinion n market value, the number of parties, and whether there are defaulted parties.

PARTITION IN KIND LOOKED TO FIRST IF BUY-OUT UNSUCCESSFUL

Once the buy-out process makes its way to a conclusion, if no party successfully completes a buy-out, the court must look to partition in kind, meaning the physical division of the property. Under the PRPA, Partition in Kind is governed by Section 874.319.

If Partition in Kind is not ordered, the court shall go through a process for a Partition by Sale.

PARTITION BY SALE UNDER THE PARTITION OF REAL PROPERTY ACT

Although the PRPA supplements the pre-existing Partition Code (which still exists, and is in full effect),

This process commences with the selection of a broker. Either the parties agree on broker within, or the court will appoint one. §874.320.

If the broker receives offer(s) that above the previously-determined market value, a sale can be competed. The broker is required to file a report, containing the following:

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.

WHAT IF NO OFFERS ARE RECEIVED ABOVE THE PRICE SET BY THE COURT

If the broker does not receive an offer that is above the market value the court previously set, the court can

1. Approve highest offer

2. Redetermine the value of the property

3. Order property sold by sealed bids or at an auction

SALE BY BIDS or SALE BY AUCTION

If the court orders the property sold by sealed bids or at an auction, the court sets terms and conditions. We advise our clients and the court as to the terms and conditions that are prudent under such a scenario.

EXTENSIVE EXPERIENCE & EXPERTISE

We have counseled and represented parties in connection with real property ranging in value from $300,000 to $25,000,000, including residential, commercial, mixed use, vacant land, multi-family, industrial, and apartments. ANAND LAW has successfully represented parties in property cases between spouses, boyfriend and girlfriend, siblings, relatives, and business partners. We handled partition cases throughout the state of California, and have the experience and dedication to create the best plan of action for your particular situation. ANAND LAW is a partition lawyer that can end your co-ownership expeditiously and ensure that you get every penny you are entitled to.