In a California partition action, certain partition offsets may be recoverable where one party made a unequal contribution to the property. Indeed, the rule is that: “The court may, in all cases, order allowance, accounting, contribution, or other compensatory adjustment among the parties according to the principles of equity.” California Code of Civil Procedure § 872.140 This means that the court will decide how to allocate the proceeds of sale during the accounting portion of the partition lawsuit.
This raises the question of whether an offset can be claimed by co-owners who work on a property themselves, then claim their labor as a recoverable offset during the accounting. This can happen where one co-owner manages the property, perhaps as a rental, and where one co-owner provides their labor, i.e., sweat equity, to improve or repair the property.
Certain offsets are recoverable in a partition action
In a partition action in California, the general principle regarding accounting and offsets is that:
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, taxes, payments of principal and interest on mortgages, and other liens, insurance for the common benefit, and protection and preservation of title.Wallace v. Daley (1990) 220 Cal.App. 3d 1028, 1035–36 (citing California Code of Civil Procedure § 872.140)
Furthermore, the recovery of certain damages can occur as part of an accounting. The default rule in California, as explained by Willmon v. Koyer (1914) 168 Cal. 369, 372–373, is that:
As an incident to cotenancy relationship, either cotenant has a right to demand of the other an accounting as to rents and profits of the cotenancy… The right to this accounting as to rents and profits inures to either cotenant as soon as the other has collected them, and the right to demand a proportionate share and maintain an action therefor on refusal to pay it then arises.Willmon v. Koyer (1914) 168 Cal. 369, 372–373
Courts have established rules that certain offsets and claims in an accounting are recoverable, while other offsets and claims are not allowed in a partition action.
Ordinarily, Claims for the Value of a Co-Owner’s Time and Labor are Not Recoverable in a Partition Action
Many co-owners have argued that their time and physical efforts related to the co-owned property should be compensated in the accounting phase of a partition action where the proceeds of sale are divided. One court found that: “Ordinarily one joint tenant cannot maintain an action against his cotenant for rent for occupancy of the property or for profits derived from his own labor. He may, however, compel the tenant in possession to account for rents collected from third parties.” Swartzbaugh v. Sampson (1936) 11 Cal.App.2d 451.
Another court explained that: “A joint tenant out of possession may not maintain an action against his cotenant in possession for the rents, issues and profits derived from the property by means of the occupant’s own labor.” Black v. Black (1949) 91 Cal.App.2d 328, 332.
This means that even if one co-owner is responsible for managing the property, and causes rents to be collected by their own efforts, those rents must be divided based on the ownership percentages. Moreover, the co-owner who managed the property would not ordinarily be entitled to anything extra for their time and effort in managing the property.
Note that the word “ordinarily” Swartzbaugh v. Sampson (1936) 11 Cal.App.2d 451 in case law would seem to suggest exceptions, such as where the parties agree to a contrary rule. Other exceptions might be made for extraordinary talents. Perhaps where one co-owner is a general contractor who oversaw a major remodel, the court might make an exception.
However, day-to-day management of an ordinary rental property is a common skillset known to many non-professionals, i.e., those who are not brokers, agents, Realtors, or property managers such that it is considered a mere duty of all co-owners that is likely not compensable in a partition action.
Contact a California Partition Attorney Today
Co-ownership relationships can be very complicated, especially when questions about the accounting are involved. If you are looking to end your co-ownership relationship, a partition action can help you achieve the best possible outcome for you. 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!Swartzbaugh v. Sampson (1936) 11 Cal.App. 2d 451, 454–55