It’s not uncommon for one co-owner to bear the brunt of property taxes, especially in scenarios where one co-owner resides on the property while others do not. An issue arises when this arrangement leads to a disparity in financial contributions for maintenance and obligations tied to the property.
Implications of Financial Distress
The failure of a co-owner to contribute their share towards property taxes is often an indicator of financial distress, which can set off a chain of consequences detrimental to the property itself and the relationship between the co-owners. The consequence, as explained by Miller and Starr, is that “[a]mounts owed to state and local taxing agencies become liens on the taxpayer’s property.”[1]State and local tax liens; in general, 4 Cal. Real Est. (4th ed.) § 10:157. The State of California, Office of the Controller, published that “[p]ublic auctions are the most common way of selling tax-defaulted property.“
In many cases, unpaid property taxes signals a potential cascade of neglect. Distressed properties often suffer from a lack of proper maintenance, insurance, and necessary repairs. Critical aspects of the property, such as the lawn, pool, roof, and plumbing, can rapidly deteriorate without attention, leading to a continuing devaluation of the property and costly rehabilitation needs in the future. A co-owner sharing a property with a co-owner who fails to pay property taxes may be on a sinking ship and partition actions can effectively end the disadvantageous co-ownership relationships.
A Partition Accounting Will Allow Co-Owners to Recover Unequal Tax Payments
“When a cotenant makes advances from his own pocket to preserve the common estate, his investment in the property increases by the entire amount advanced. Upon sale of the estate he is entitled to be reimbursed his entire advancement before the balance is equally divided.”[2]Southern Adjustment Bureau, Inc. v. Nelson (1964) 230 Cal. App. 2d 539, 541.
In the case of Wallace v. Daley, the court found that “[e]very partition action includes a final accounting according to the principles of equity for both charges and credits upon each cotenant’s interest. Credits include expenditures in excess of the co-tenant’s fractional share for necessary repairs, improvements that enhance the value of the property, taxes, payments of principal and interest on mortgages, and other liens, insurance for the common benefit, and protection and preservation of title.”[3]Wallace v. Daley (1990) 220 Cal.App.3d 1028, 1035
This was also affirmed by another California court “a cotenant who pays taxes, trust deed payments or other charges against the property or expends money for the preservation of the property or who, with the assent of his cotenant, makes improvements to the property is entitled to contribution from the cotenant, and on partition by sale is entitled to reimbursement for those expenditures before division of the proceeds among the property owners.”[4]Milian v. De Leon (1986) 181 Cal.App.3d 1185, 1194.
File a Partition Action to Protect Your Interests
It is important to take prompt action when a co-owner fails to pay property taxes. Communicating with your co-owner to resolve any disputes or misunderstandings regarding financial obligations is the first step. If these conversations fail to yield a solution, consider formal legal action by filing for a partition. Partition actions will effectively end the co-ownership arrangement, allowing for a division or sale of the property that reflects each owner’s contributions and interests. In California, “if the party seeking partition is shown to be a tenant in common, and as such entitled to the possession of the land sought to be partitioned, the right is absolute.”
California law allows for three manners of partition: partition in kind, partition by appraisal, and partition by sale. The law encourages a partition by sale when “(1) a division into subparcels of equal value cannot be made, or (2) a division of the land would substantially diminish the value of each party’s interest, such that the portion received by each cotenant would be of substantially less value than the cash received on a sale.”[5]Right of partition—Partition by a sale of the property, 4 Cal. Real Est. (4th ed.) § 11:17
Talkov Law’s Partition Attorneys Can Help
The failure of a co-owner to meet their tax obligations not only puts the property at risk of levy and sale by the county, but also signals a broader neglect that can lead to the property’s rapid deterioration. If your co-owner continues to neglect their financial obligations as a co-owner, our attorneys specialize in navigating the complexities of co-ownership disputes. A partition action is the only way to resolve co-owner disputes and recover contributions you made towards the property. As California’s #1 team for partition action, Talkov Law’s partition attorneys are equipped to provide the guidance and representation you need. For a free consultation, call (844) 4-TALKOV (825568) or reach out online today.
References
| ↑1 | State and local tax liens; in general, 4 Cal. Real Est. (4th ed.) § 10:157. |
|---|---|
| ↑2 | Southern Adjustment Bureau, Inc. v. Nelson (1964) 230 Cal. App. 2d 539, 541. |
| ↑3 | Wallace v. Daley (1990) 220 Cal.App.3d 1028, 1035 |
| ↑4 | Milian v. De Leon (1986) 181 Cal.App.3d 1185, 1194. |
| ↑5 | Right of partition—Partition by a sale of the property, 4 Cal. Real Est. (4th ed.) § 11:17 |
