The Uniform Partition of Heirs Property Act (UPHPA) was a law that was enacted January 1, 2022. It was originally introduced into California’s legislature as Assembly Bill No. 633 and was signed by Governor Gavin Newsom signed in July 2021. The UPHPA provided defendants in a partition action added opportunities to buy out their co-owners. It “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.
However, after just one year, its application was expanded by the Partition of Real Property Act effective January 1, 2023. Both Acts aim to prevent dispossession of property by way of a forced sale, but the Partition of Real Property Act eliminates the requirement that the property be “heirs property,” meaning the appraised buyout process now applies to nearly all property in California.
Requirements of the UPHPA
The Uniform Partition of Heirs Property Act has been replaced by the Partition of Real Property Act and only applies to partition actions filed between January 1, 2022 and December 31, 2022.
In addition to the requirement under California law that the partition action must have been filed in the 2022 calendar year, the Uniform Partition of Heirs Property Act in California only applied to: 1) heirs property 2) in which there is no written agreement governing partition among the owners. If these conditions were met, the UPHPA afforded protections for non-partitioning co-owners of heirs property.[2]California Code of Civil Procedure 874.313 (since amended)
Heirs Property Defined
Contrary to what some people may believe, the definition of “heirs property” under the Uniform Partition of Heirs Property Act in California applied to more than just property that is inherited after death by “heirs” as that term is commonly understood. Rather, “heirs property” was defined as follows:
“Heirs property” means real property held in tenancy in common which satisfies all of the following requirements as of the filing of a partition action:
(1) There is no agreement in a record binding all the cotenants which governs the partition of the property.
(2) One or more of the cotenants acquired title from a relative, whether living or deceased.
(3) Any of the following applies:
(A) Twenty percent or more of the interests are held by cotenants who are relatives.
(B) Twenty percent or more of the interests are held by an individual who acquired title from a relative, whether living or deceased.
(C) Twenty percent or more of the cotenants are relatives.
Code of Civil Procedure Section 874.312(e) (since amended)
This requirement that one or more of the co-owners acquired title from a “relative” includes relatives that are “living,” meaning the Uniform Partition of Heirs Property Act applied even if you purchase a property from your living parent, cousin, or otherwise. In other words, the “heirs” portion of the act is a misnomer as the act really applied to any property acquired from a relative. The only exception would be if those who met this qualification were less than 20 percent of the ownership. Accordingly, the Act was intended to assist many inter-family disputes.
Partition Action Process Under the Uniform Partition of Heirs Property Act
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 UPHPA: “If a cotenant requests partition by sale, the bill would give cotenants who did not request the partition the option to buy all of the interests of the cotenants that requested partition by sale, as specified.”[3]Assem. Bill 633, 2021, ch. 119, (Ca. 2022) In other words, this creates a right of first refusal for non-partitioning parties. The default procedure for co-owners of heirs property requesting a partition by sale was as follows:
- The court will determine whether the property is heirs property California Code of Civil Procedure 874.313(a) (since amended)
- If the court determines that the property is heirs property, the court will order an appraisal of the property to determine its fair market value (FMV) California Code of Civil Procedure 874.316(a) OR if all parties have agreed to a value of the property or another method of valuation, the court will adopt that valuation California Code of Civil Procedure 874.316(b)
- Importantly, this step acts as a partition by appraisal, which is otherwise rarely found in partition actions
- Any party may file an objection to the appraisal within 30 days after notice is sent California Code of Civil Procedure 874.316(e)(3)
- If an appraisal is ordered, a third party real estate appraiser will determine FMV no sooner than 30 days after the notice is sent whether or not an objection to the appraisal has been filed California Code of Civil Procedure 874.316(f)
- If a partition by sale has been requested, the court notifies all co-owners who did not request the partition by sale that they may buy the interests of the partitioning co-owner California Code of Civil Procedure 874.317(a)
- A non-partitioning co-owner has 45 days exercise their right of first refusal by giving notice that he or she intends to buy the interests of the partitioning co-owner California Code of Civil Procedure 874.317(b)
- If more than one non-partitioning party elects to purchase the interests of the partitioning party, the court will then allocate the right to buy the interests among the purchasing parties according to their fractional ownership percentages California Code of Civil Procedure 874.317(f)(2)
- The parties who expressed interest in purchasing the partitioning parties’ interest (ie exercised their right of first refusal) then have 60 days from when the court sent the notice to arrange financing California Code of Civil Procedure 874.317(e)
What if the Non-Partitioning Parties Did Not Purchase the Interests of the Partitioning Parties 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.
Additional Appraisal Procedures Under the UPHPA in California
Additionally, “In an action for partition of heirs 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.” [4]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, “The bill would permit the court to apportion the costs of partition among the parties in proportion to their interests, but would prohibit the apportionment of costs among parties that oppose the partition, except as specified.” [5]Assem. Bill 633, 2021, ch. 119, (Ca. 2022) Put another way, costs will be apportioned among partitioning parties in accordance with their ownership percentages.
Partition of Real Property Act Now Applies
Effective January 1, 2023, the Partition of Real Property Act in California has replaced and expanded the role of the Uniform Partition of Heirs Property Act. See our blogging on this new law for expanded coverage.
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 370 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.
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