California Code of Civil Procedure 873.520 is the California partition statute that allows the court to determine whether the property should be sold either at a public auction or through a private sale. The statute provides that:
The property shall be sold at public auction or private sale as the court determines will be more beneficial to the parties. For the purpose of making this determination, the court may refer the matter to the referee and take into account the referee’s report.
California Code of Civil Procedure 873.520
“Section 873.520… makes clear that there is no preference for either public or private sale. The reference to a referee for determination whether public or private sale would be more beneficial may be combined with a reference to determine whether partition by sale is more equitable than partition by division. See Section 872.820 and Comment thereto.”1976 Law Revision Comment to California Code of Civil Procedure 873.520
As a practical matter, most properties sold by courts in a partition action are sold through a public auction. However, this does not mean that the partition referee will carry out the sale of the property at a discounted, fire sale price. To the contrary, the property is generally marketed in the normal manner, i.e., through a Realtor listing the property on the Multiple Listing Service (MLS), holding an open house, and allowing a reasonable period of time for purchase offers to come in. This means that the sales price will likely be very similar to a normal sale, the only difference being a short delay after a buyer is accepted for court approval of a buyer.
One unpublished decision sheds light on the meaning of the terms in this section, and the discretion of the court to allow a private sale as follows:
Under Code of Civil Procedure section 873.520 the property to be partitioned is sold at public auction or private sale based on the court’s determination of what will be more beneficial for the parties. Here, the trial court concluded that an initial private sale would best serve John’s and William’s interests. William contends a private sale is unfair because it does not test the market. However, evidence was presented that the parcels at issue would most likely be undesirable to third parties and therefore difficult to sell. Certain parcels have problems with access and easements. Also, in order to keep cattle off of a purchased parcel, a third party would have to construct fences along the boundaries at a cost of approximately $10,000. Moreover, John expressed a preference of keeping the property in the family. Under these circumstances, the trial court did not exceed the bounds of reason in ordering an initial private sale.Jamison v. Jamison (Cal. Ct. App. Dec. 9, 2004) No. F043236, 2004 WL 2827711, at *2
This decision reflects the ability to use a partition to transfer title to a closely related party without placing the property on the market, thereby ending the co-ownership relationship.
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