Can You Make Property Improvements During a Partition?

While you may want to make improvements to a co-owned property, you may want to consider the timing in relation to when you file a partition. This article will discuss the advantages and disadvantages of allocating funds for property improvements depending on where you are in filing a partition action.

Should You Make Improvements Before You File for Partition?

If you are inclined to partition your property or in the process of retaining a partition attorney, there are few benefits to making the improvements before you a partition complaint.

The problem with making the improvements before the partition action is that you will need to document those improvements, then seek reimbursement for those improvements in a partition.^[1]In relation to partition in-kind, a California court interpreted California Code of Civil Procedure 873.220 to support the co-owner’s recovery of “any portion that embraces improvements made … Continue reading This will involve ensuring that your documentation is accurate, that the payments were made, and the improvement was necessary or increased the value of the property. As a practical matter, most partition actions result in a settlement, and small amounts are often forgotten about to reach a resolution as few parties will want to pay an attorney to argue over a small claim for reimbursement.

Reimbursement for Improvements in Partition Actions

Should You Make Improvements After You File for Partition, But Before a Partition Referee is Appointed?

Once you have filed a partition action and involved the court, “[w]hether the partition is by a division of the property or the distribution of the sales proceeds, the cotenant who has made the improvement is entitled to the resulting enhancement in value.”^[2]Miller & Starr, Right of partition—Compensation for improvements, 4 Cal. Real Est. (4th ed.) § 11:19 (citing Wallace v. Daley (1990) 220 Cal.App.3d 1028, 1035–38.

Under California Code of Civil Procedure § 872.140, “[t]he court may, in all cases, order allowance, accounting, contribution, or other compensatory adjustment among the parties according to the principles of equity.” In consideration of equity, a California court will note “[w]hen a cotenant makes advances from his own pocket … 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.”^[3]Southern Adjustment Bureau v. Nelson (1964) 230 Cal.App.2d 539, 541.

The co-owner’s consent is not necessary to claim a reimbursement for improvements. “Even though one cotenant does not consent to making of improvement, since action for partition is essentially equitable in nature, court of equity is required to take into account improvements which another cotenant at his own cost in good faith placed on property which enhanced its value and to award such cost to him.^[4]Mercola v. Chester (1950) 97 Cal. App. 2d 140, 217.

Partition Offsets and Accounting in California

Claiming the Improvements in a Partition Action

Regardless of when the improvements were made, the law is generally the same as to claiming reimbursement for improvements.

In a partition action, “where it is shown that one cotenant in common has, in good faith, with or without the consent of his cotenant, expended money in making permanent improvements which were necessary to the preservation of the common property, partition should not be decreed without first counting the cost of such improvements, and making a suitable allowance for the same.”^[5]Ventre v. Tiscornia (1913) 23 Cal.App. 598, 605.

“Every partition action includes a final accounting according to the principles of equity for both charges and credits upon each co-tenant’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….”^[6]Wallace v. Daley (1990) 220 Cal.App. 3d 1028, 1035.

It is wise to retain all your receipts as proof of your expenses for which you seek reimbursement. Reimbursement is more likely to be granted for standard repairs that enhance the property’s value.

For example, fixing a leaky faucet or remodeling a bathroom is likely to be reimbursed by a court. However, choosing to paint your house hot pink might not contribute to its value so it may be difficult to ask for reimbursement. Proving that the payment was made for the work and that the work was done in a workman like manner means that it is best to employ a contractor who is not a close relative and keep clear documentation of the relation of each payment to the improvement at the property.

Making Improvements After a Referee is Appointed

Unless the interlocutory judgment of partition provides otherwise, the referee has no duty to make repairs, but can confirm reimbursements if the co-owners make the repairs. A partition referee can give you assurances of reimbursements, particularly if the court has included such authority in your interlocutory judgment. Even if you qualify for reimbursements, rehabilitating the property amidst litigation may not always be worthwhile. Routine repairs, such as fixing a leaky roof, should be addressed, but it’s uncommon for co-owners to actually carry out improvements during a partition.

The court can instruct the referee, which can include reimbursing a party for any improvements made after the referee is appointed. These instructions can come in many forms, such as a ruling that: “The partition referee shall report to the court regarding the allocation and distribution of the net sales proceeds of the Property in accordance with Code of Civil Procedure § 873.850 et seq., including the allocation of the sale proceeds with respect to Property costs, income and benefits among the parties. (Italics omitted.) Thus, the trial court understood and anticipated that additional fees and costs would be expended, and additional rent received, requiring allocation by the partition referee.”^[7]Rahgoshay v. Hongyun Luo (Cal. Ct. App., Sept. 19, 2019) No. G056735.

Partition Referee Reports on Offsets & Accounting

Can a Sole-Occupant be Reimbursed for Repairs?

Sometimes, one co-owner is in possession of the property while also making ordinary repairs. One California case found that “the ordinary type of repairs and improvements” during the sole tenancy of one owner does not entitled that sole occupant to reimbursements.^[8]Gerontopoulos v. Gerontopoulos (1937) 20 Cal. App. 2d 261, 265.

In another California partition, the court noted that “improvements by a cotenant in possession as an ordinary tenant, made solely for his individual purpose, cannot form the basis of a claim for contribution against his cotenant upon partition.”^[9]Ventre v. Tiscornia (1913) 23 Cal.App. 598, 601.

In other words, it is important to make a distinction between ordinary repairs, such as a leaky faucet, that is likely to be reimbursed, and improvements, such as a new kitchen, that is highly likely to be reimbursed.

Recovering Repairs and Improvements in a Partition Action

Can You Recover for Your Time and Labor on Property Improvements?

California law is that a co-owner “cannot maintain an action against his cotenant…for profits derived from his own labor.“^[10]Swartzbaugh v. Sampson (1936) 11 Cal.App.2d 451, 455.

This ruling highlights the limitations on financial claims between co-owners regarding the use or enhancement of shared real estate in that sweat equity, whether in managing the property or making repairs, is often not recoverable. Each co-ownership embodies different nuisances and a partition attorney can help you navigate through these complexities to achieve the most equitable outcome.

Talkov Law’s Partition Attorneys Can Help

In order to understand whether improvements to a property can be compensated, you will require the skills of an experienced partition attorney. With nine full-time partition lawyers, Talkov Law is the #1 partition law firm in California and has handled over 400 partition actions throughout California. Contact California’s premier partition action law firm by reaching out to Talkov Law. For a free consultation, call (844) 4-TALKOV (825568) or reach out online today.