An investment property with tenants can be partitioned, but some unique issues can arise during a partition of a tenant-occupied property. These cases can involve rented single-family homes, or they can be the partition of commercial properties, including apartments, office buildings, or industrial properties.
When a rental property becomes the subject of a partition action, the resulting consequences can impact both landlords and tenants. It is important for co-owner/landlords to understand the potential implications of a partition action on their tenants and the rental operations.
At the Outset, the Parties Will Continue to Manage the Rental Property
When a partition complaint is filed, the partition statutes do not include any particular rules for the management of the property. Accordingly, the co-owners will continue to manage the property on their own unless or until the court orders otherwise or the parties agree otherwise.
Receivers in a Partition Action – What Do They Do?
Indeed, during the partition process, it is possible for management control over the rental property to be handed over to a partition receiver.
A partition receiver is an officer or representative of the court, appointed to take the charge and management of property which is the subject of litigation before it, for the purpose of its preservation and ultimate disposition according to the final judgment therein. Kreling v. Kreling (1897) 118 Cal. 421, 422.
Generally, a receiver or referee is a neutral third party who is appointed to preserve a piece of property and any person’s rights in the property pending a judgment in the outstanding litigation. See Cal. Rules of Court Rule 3.1179; Code Civ. Proc. § 564. Indeed, a partition receiver is prohibited from having a relationship with the the judge or the court. Code Civ. Proc. § 873.050.
Section 564(a) of the Code of Civil Procedure notes that a court may appoint a receiver during the pendency of the proceeding in which a receiver is required. California cases affirm the court’s ability to appoint a receiver during the pending litigation. See Chalta v. Biller (1931) 212 Cal. 745, 747. “The following applicable rules of law on the merits of the case are settled: A superior court has jurisdiction to appoint a receiver as an ancillary remedy in an action for partition of real property between tenants in common.” Lent v. H.C. Morris Co. (1938) 25 Cal.App.2d 305, 307. “The superior court has jurisdiction to appoint a receiver as an ancillary remedy in an action for partition of real property among tenants in common and should do so when the circumstances require it.” Blodgett v. Haddock (1949) 95 Cal.App.2d 17, 18.
“In the conduct of the action, the court may hear and determine all motions, reports, and accounts and may make any decrees and orders necessary or incidental to carrying out the purposes of this title and to effectuating its decrees and orders.” California Code of Civil Procedure 872.120.
Partition Referee to Sell a Rental Property
Generally, the court is required to appoint a referee to market and sell the property. Code Civ. Proc. § 873.010(a). In the event of a partition by sale, the rental property will be sold by a partition referee, and tenants may be obliged to vacate the premises. Lease agreements frequently contain provisions addressing lease termination in the event of a sale, which can serve as a safeguard for tenants against abrupt eviction. It is also possible that the property may be sold subject to the lease, allowing the tenants to remain in the property.
Talkov Law's Partition Attorneys Can Help
If you want to end your co-ownership relationship, but your co-owner won’t agree, a partition action is your only option. With six, full time partition lawyers, Talkov Law is the #1 partition law firm in California and has handled 250 partition actions throughout California. Every case has resulted in a sale to either a third party or one of the co-owners. Not a single court has denied our clients the right to partition or declared our client to be a non-owner. Plus, for qualified cases, there is no fee until we settle or win your case!