Right of First Refusal in a California Partition Action

What is a Right of First Refusal in a Partition Action?

In a California partition action, a right of first refusal is a right given to co-owners that allows them to purchase their other co-owners’ interests before the property is sold to a third party. This gives all co-owners a chance the resolve the co-ownership dispute before it escalates to a sale on the open market.

Right of First Refusal in the Partition of Real Property Act

The Partition of Real Property Act is a bill that went into effect January 1, 2023 that allows non-partitioning parties of “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” to buy out their co-owners’ interests. ^[1]California Code of Civil Procedure 874.311 California Code of Civil Procedure 874.317 further describes the added opportunities and time frame available to the non-partitioning parties should they choose to buy out the partitioning parties’ interests. Essentially, the Partition of Real Property Act creates a right of first refusal for non-partitioning parties that was not previously available to them. Note that the Partition of Real Property Act will not apply to all partition actions. However, parties who did not request a sale in partition actions in which it does apply are statutorily given the opportunity of right of first refusal.

Does the Right of First Refusal Create a Waiver to the Right to Partition in California?

California Code of Civil Procedure 872.710(b) states that “partition…shall be as of right unless barred by a valid waiver.” California courts have also long established that: “A co-owner of property has an absolute right to partition unless barred by a valid waiver.” ^[2]Orien v. Lutz (2017) 16 Cal. App. 5th 957Orien v. Lutz (2017) 16 Cal. App. 5th 957.[/fn] Indeed, the absolute right to partition is one of the key partition rights for owners of jointly owned property.

One of the few defenses to this absolute right is waiver to the right to partition. In many cases, the right of first refusal may be construed as an implied waiver to the right to partition. Indeed, “one party will not sell his one-half interest in the property without first giving to the other coowner the right to purchase it…” ^[3]Schwartz v. Shapiro (1964) 229 Cal.App.2d 238, 252. Another court found that “the right of first refusal waived the statutory right to partition…” ^[4]LEG Investments v. Boxler (2010) 183 Cal.App.4th 484, 492. This same court also made it clear that it “follow[s] Schwartz and find[s] the right of first refusal modifie[s] the statutory right to partition and require[s] the selling cotenant to first comply with the terms of … [the] agreement before seeking partition.” ^[5]LEG Investments v. Boxler (2010) 183 Cal.App.4th 484, 497.

What if a Co-Owner Declines their Right of First Refusal in a Partition Action?

When a non-partitioning co-owner can’t or won’t buy out their co-owners, their right of first refusal will expire. Indeed, the Court of Appeal established that: “Upon the nonselling owner’s refusal or failure to exercise his right to purchase within a reasonable time, the seller has discharged his obligation to his coowner and he may proceed with partition.” ^[6]Schwartz v. Shapiro (1964) 229 Cal.App.2d 238, 253.

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 nine, full time partition lawyers, Talkov Law is the #1 partition law firm in California and has handled over 430 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.