California Code of Civil Procedure 874.316 is the California partition statute that sets forth the manner in which the fair market value of the property is determined under the Partition of Real Property Act. The statute states the following:
(a) Except as otherwise provided in subdivisions (b) and (c), the court shall determine the fair market value of the property by ordering an appraisal pursuant to subdivision (d).
California Code of Civil Procedure Section 874.316
(b) If all cotenants have agreed to the value of the property or to another method of valuation, the court shall adopt that value or the value produced by the agreed method of valuation.
(c) If the court determines that the evidentiary value of an appraisal is outweighed by the cost of the appraisal, the court, after an evidentiary hearing, shall determine the fair market value of the property and send notice to the parties of the value.
(d) If the court orders an appraisal, the court shall appoint a disinterested real estate appraiser licensed in the State of California to determine the fair market value of the property assuming sole ownership of the fee simple estate. On completion of the appraisal, the appraiser shall file a sworn or verified appraisal with the court.
(e) If an appraisal is conducted pursuant to subdivision (d), not later than 10 days after the appraisal is filed, the court shall send notice to each party with a known address, stating all of the following:
(1) The appraised fair market value of the property.
(2) That the appraisal is available at the court clerk’s office.
(3) That a party may file with the court an objection to the appraisal not later than 30 days after the notice is sent, stating the grounds for the objection.
(f) If an appraisal is filed with the court pursuant to subdivision (d), the court shall conduct a hearing to determine the fair market value of the property not sooner than 30 days after a copy of the notice of the appraisal is sent to each party under subdivision (e), whether or not an objection to the appraisal is filed under paragraph (3) of subdivision (e). In addition to the court-ordered appraisal, the court may consider any other evidence of value offered by a party.
(g) After a hearing under subdivision (f), but before considering the merits of the partition action, the court shall determine the fair market value of the property and send notice to the parties of the value.
Court Ordered Appraisal of Partitioned Property
The essence of Section 874.316(a) is that “the court shall determine the fair market value of the property by ordering an appraisal” of the co-owned property. The use of the mandatory word “shall” means that the court has no discretion not to order the appraisal.
Court Required to Adopt Value or Valuation Method Agreed by the Co-Owners
Section 874.316(b) requires the court to adopt any agreed value or the value produced by the agreed method of valuation.
Exception: If the Appraisal Would be of Low Evidentiary Value
Section 874.316(c) does allow the court to decline an appraisal only if the evidentiary value of an appraisal is outweighed by the cost of the appraisal. In such a scenario, the court shall hold an evidentiary hearing after which it determines the fair market value of the property. When this value is determined, it would send notice to the parties of the value. Seemingly, this lack of evidentiary value of an appraisal would arise when the values determined by the co-owners are either extremely close, or if the expected outcome of an appraisal would simply engender further debate because the property is very hard to value. This latter scenario might occur if a business is being run on the property or in the case vacant land, which is notoriously hard to value.
Court Appointed Appraiser Must be “Disinterested”
Section 874.316(d) requires that, if the court orders an appraisal, the court may only appoint a “disinterested real estate appraiser.” This should help to engender trust among co-owners of property upon being confident that the appraiser is not a friend, relative or business associate of any co-owner.
Notice to Co-Owners of Appraised Value
Section 874.316(e) sets forth the requirements of notice of the appraised value to co-owners, notably that notice is to be given by the court 10 days after the appraisal is filed. The notice must state all of the following: “(1) The appraised fair market value of the property. (2) That the appraisal is available at the court clerk’s office. (3) That a party may file with the court an objection to the appraisal not later than 30 days after the notice is sent, stating the grounds for the objection.”
Hearing on Appraisal
Section 874.316(f) provides that the court shall conduct a hearing to determine the fair market value of the property after more than 30 days after a copy of the notice of the appraisal has been sent to each party regardless of whether or not an objection to the appraisal is filed. At the hearing, the court may consider both the appraisal and any other evidence of value offered by a party.
Determination of Fair Market Value
Section 874.316(g) sets forth that, after the court holds the hearing on the appraisal, the court will make a determination of the fair market value of the property and send notice to the parties of the value.
Contact an Experienced Partition Attorney in California
If you want to end your co-ownership relationship, but your co-owner won’t agree, a partition action is your only option. Our knowledgeable partition lawyers have years of experience ending co-ownership disputes and can help you unlock the equity in your property. For a free, 15-minute consultation with an experienced partition attorney at Talkov Law, call (844) 4-TALKOV (825568), email us at info(at)talkovlaw.com, or fill out a contact form online. Contact Talkov Law today to find out how you can pay nothing today and have your legal fees paid from the proceeds of sale of your property!
