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Partition of Real Property Act – California – The Ultimate Guide

What is the Partition of Real Property Act in California?

The Partition of Real Property Act is a new bill that went into effect on January 1, 2023, which replaces the Uniform Partition of Heirs Property Act. The law gives defendants an opportunity to buy the property at an appraised value as supervised by the court.

Previously, the Uniform Partition of Heirs Property Act only allowed appraised buyouts by non-partitioning co-owners (i.e., defendants) involving heirs property, which usually meant inherited property, to retain their share of an inherited property by ensuring that they have the necessary due process to prevent the forced sale of the property. The updated Partition of Real Property Act has eliminated the requirement that the property be “heirs property,” making it easier than ever to solve co-ownership disputes between co-owners of property through a California partition action.

The bottom line is that the Partition of Real Property Act allows co-owners of property a much easier way to buy out their co-owners. Owners of property that is resided in by their co-owner now have a nicer way to ask that their co-owners to buy them out or move on so that everyone can obtain their equity. The Partition of Real Property Act in California accomplishes these goals by forcing a partition by appraisal where it would otherwise not be allowed.

Partition of Real Property Act Statutes

When Did the Partition of Real Property Act Go into Effect?

Governor Gavin Newsom signed Assembly Bill No. 2245 in July 2022. The bill applies to any partition actions filed after January 1, 2023. The bill also expands the Uniform Partition of Heirs Property Act “to apply to any real property held in tenancy in common where there is no agreement in a record binding all the cotenants which governs the partition of the property.” Notably, the Partition of Real Property Act removes the condition under the UPHPA requiring the property to be heirs property, expanding the scope of partition actions far beyond those included in the UPHPA.

What is the Purpose of the Partition of Real Property Act in California?

The predecessor of the Partition of Real Property Act, the UPHPA, “preserves the right of a co-tenant to sell his or her interest in inherited real estate, while ensuring that the other co-tenants will have the necessary due process to prevent a forced sale: notice, appraisal, and right of first refusal.[1]Nat’l Conf. of Comm’rs on Uniform State Laws, The Uniform Partition of Heirs Property Act – A Summary, 2010. The Partition of Real Property Act retains this goal while also seeking to “expand the scope of the Uniform Partition of Heirs Property Act to apply to any real property held in tenancy in common where there is no agreement in a record binding all the cotenants which governs the partition of the property.” [2]CA LEGIS 82 (2022), 2022 Cal. Legis. Serv. Ch. 82 (A.B. 2245) The act aims to prevent dispossession of property by way of a forced sale. For many, property is their most valuable asset. Being forced to sell this asset can potentially negatively impact those who co-own the property.

For example, perhaps one co-owner has sold their interest to a real estate investor. As a co-owner, the investor can now force the sale of the property below fair market value, just to buy it back in full. The non-partitioning co-owners are now left without their inherited property and with little cash to show for its sale, while the real estate investor walks away with the heirs property.

Partition of Real Property Act, previously known as the California Uniform Partition of Heirs Property Act
The Partition of Real Property Act allows for the preservation of generational wealth and familial relationships

What are the Requirements for the Partition of Real Property Act in California?

In addition to the requirement that the partition action must have been filed on or after January 1, 2023 in California, the Partition of Real Property Act applies to: “real property held in tenancy in common where there is no agreement in a record binding all the cotenants which governs the partition of the property.” [3]California Code of Civil Procedure 874.311(b) That’s it!

What is the Partition Action Process under the Partition of Real Property Act in California?

Normally, in a partition action in California, a co-owner of a property has the absolute right to force the sale of the jointly owned property. However, under the Act: “If any cotenant requested partition by sale, the court shall, after the determination of value under Section 874.316, send notice to the parties that any cotenant except a cotenant that requested partition by sale may buy all the interests of the cotenants that requested partition by sale.” [4]California Code of Civil Procedure 874.317(a) In other words, this creates a right of first refusal for non-partitioning parties.

The partition process under the Partition of Real Property Act creates added opportunities for non-partitioning parties to maintain an interest in the property they have inherited.

What if the Non-Partitioning Party Does Not Purchase the Interests of the Partitioning Party in California?

If the non-partitioning parties are unable to or do not want to exercise their right to purchase the interests of the partitioning parties, the court will then partition the property in kind or by sale (depending on what is appropriate) just as it would for non heirs property.

Uniform Partition of Heirs Property Act - California

Can you Appoint a Referee Under the Partition of Real Property Act?

A partition referee may be appointed under California Code of Civil Procedure 874.315 pursuant to California Code of Civil Procedure 873.010. These statutes allow a referee, who is a neutral, third party, to oversee the equitable sale or division of a property. However, it is possible that defendants can raise appointing a referee under the Act as an issue and they may ask for an appraisal.

Additional Appraisal Procedures Under the Act in California

Additionally, “In an action for partition of property, the court may apportion the costs of partition, including an appraisal fee, pursuant to Section 874.040, except that the court shall not apportion the costs of partition to any party that opposes the partition unless doing so is equitable and consistent with the purposes of this chapter.” [5]California Code of Civil Procedure 874.321.5 Indeed, non-partitioning parties will not bear the costs of partition unless the court deems it equitable for them to do so.

Even further, “In an action for partition of property, the court may apportion the costs of partition, including an appraisal fee, pursuant to Section 874.040, except that the court shall not apportion the costs of partition to any party that opposes the partition unless doing so is equitable and consistent with the purposes of this chapter.” [6]California Code of Civil Procedure 874.321 Put another way, costs will be apportioned among partitioning parties in accordance with their ownership percentages.

Legislative History of the Partition of Real Property Act

Perhaps the most fascinating part of the new law is how they came about. A review of the legislative history shows that only one group supported the Uniform Partition of Heirs Property Act in 2021 and, later, the Partition of Real Property Act: The California Association of Realtors.[7]AB 633 (2021), https://leginfo.legislature.ca.gov/faces/billAnalysisClient.xhtml?bill_id=202120220AB633 AB 2245 (2022), … Continue reading Of particular interest to Realtors is the requirements under the new law that the court appoint a real estate broker to list the property in a commercially reasonable manner, i.e., the MLS (Multiple Listing Service) operated by the various Realtor boards.[8]Code of Civil Procedure Section 874.320 This means that a broker can be appointed directly by the court, rather than by the referee or as a referee.

The Realtors advanced the idea that partitions sometimes results in a private sale or court auction not open to the public. While this is technically allowed under partition law[9]Code of Civil Procedure § 873.520, the frequency of such a method of sale was not referenced in the legislative history. In our experience, partitions generally involve court appointed referees who use brokers to sell the property on the open market.

Talkov Law's Partition Attorneys Can Help

If you want to end your co-ownership relationship, but your co-owner won’t agree, a partition action is your only option. With seven, full time partition lawyers, Talkov Law is the #1 partition law firm in California and has handled over 300 partition actions throughout California. Every case has resulted in a sale to either a third party or one of the co-owners. Not a single court has denied our clients the right to partition or declared our client to be a non-owner. Plus, for qualified cases, there is no fee until we settle or win your case!

If you're looking to end your co-ownership dispute, contact California's premier partition action law firm by calling Talkov Law at (844) 4-TALKOV (825568) or sending us a message today.

References

References
1 Nat’l Conf. of Comm’rs on Uniform State Laws, The Uniform Partition of Heirs Property Act – A Summary, 2010.
2 CA LEGIS 82 (2022), 2022 Cal. Legis. Serv. Ch. 82 (A.B. 2245)
3 California Code of Civil Procedure 874.311(b)
4 California Code of Civil Procedure 874.317(a)
5 California Code of Civil Procedure 874.321.5
6 California Code of Civil Procedure 874.321
7

AB 633 (2021), https://leginfo.legislature.ca.gov/faces/billAnalysisClient.xhtml?bill_id=202120220AB633

AB 2245 (2022), https://leginfo.legislature.ca.gov/faces/billAnalysisClient.xhtml?bill_id=202120220AB2245

8 Code of Civil Procedure Section 874.320
9 Code of Civil Procedure § 873.520
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