Real Estate Partition Definition in California
A partition action is a court-ordered equitable division of property. When one or more co-owners disagrees on what to do with a co-owned property, a partition action can be started to force the sale of the subject property. This definition of a real estate partition shows how a partition can be used to divide co-owned property, which usually involves the court overseeing the selling of the property and division of the proceeds in line with the ownership interests of the parties, e.g., 50/50.
Parties Who Can File a Partition Action
A partition action, sometimes referred to as a petition for partition, requires at least two co-owners. Usually, the co-owners disagree on what to do with a co-owned property, most commonly whether the property should be sold or not. Generally, the co-owner in possession prefers not to sell the property. The law is that virtually any co-owner can file a partition action.California Code of Civil Procedure 872.210 describes who is authorized to commence a partition action as: (1) A coowner of personal property. (2) An owner of an estate of inheritance, an estate for … Continue reading
Common Parties to a Partition Action
Generally, at least one party will want to sell the property while the other wants to retain ownership. The party or parties refusing to sell are usually living at the property and receiving the full benefit of property ownership. The experienced partition attorneys
- Romantic: Co-owners who were romantically involved but are no longer together are the most common parties to a partition. Effectively, a partition between former romantic partners is the non-married version of a divorce. Often, one partner will continue to remain in the property while another moves out. The partner who does not reside at the property may want to force a sale to receive his or her equity in the co-owned property and to remove their name from the mortgage.
- Family and Inheritance: Many co-owners find themselves co-owning property with a family member. While some parties purchase properties with family during their lifetime, other co-owners inherit a home together with their family members. This is a result of very common estate planning that leaves an equal interest in the family home to each child. Co-owners who do not live at the property and receive no benefit from their inheritance will often seek to force the sale of the inherited property to receive their equity due to noncooperation from the sibling still living at or renting out the family home. Note that if the property has not yet been transferred from a trust or estate to the beneficiaries, the issue may be more appropriate in a probate court.
- Platonic: Friends who purchased property together. A reliable friend may be instrumental in helping to secure a loan for the home, contributing to mortgage payments, or investing in a property that neither of the parties could afford on their own. However, if this friend wants to sell the property while their co-owners do not, this may lead to a forced sale of the property.
- Post-Divorced Couples: Sometimes, parties in a divorce kick the can down the road as to how to split the family home by maintaining co-ownership of the home as their separate property. Perhaps one of the spouses will maintain the family home until the children are of age, or perhaps the parties will live together following their divorce. So long as the divorce judgment states that the parties now own the property as their sole and separate property, a partition is the remedy to solve the co-ownership problems. Note that if the divorce has not yet been finalized, then the property is still community property that is considered a family law matter requiring a divorce attorney with experience in property division.
Can I file a partition? Partition action eligibility
However title is held, there is essentially only one basic requirement for a partition: That the property is co-owned.
Evidence of Co-Ownership – Deeds vs. Quiet Title
Effectively, the only evidence that a plaintiff in a partition will need is evidence that they are a co-owner.
The most common form of evidence of co-ownership is a deed recorded in the county recorder where the property is located identifying the grantee (transferee/buyer/recipient) as the co-owner. For example, the deed might say something like “John Doe hereby transfers to Jessica Doe and Noah Doe.” This evidence is the strongest since nearly all deeds reflect the true owner of the property as presumed by California Evidence Code Section 662.
However, in a few rare cases, the person(s) named as the grantee(s) in the deed, known in the law as the holder(s) of “legal title,” do not reflect the true owner(s) of the property, known in the law as “equitable title” or “equitable owner(s).” For example, perhaps a deed reflects that “John Smith and Noah Smith hereby transfers to Jessica Smith,” but John and Noah merely intended Jessica to hold title for them if they do not live through their forthcoming trip to Mt. Everest. If John and Noah live through their trip, but Jessica refuses to transfer the property back to them, they may need to file an action for quiet title. If John or Noah would also want to end the co-ownership, they can litigate the quiet title action within the context of a partition under California Code of Civil Procedure 872.610.
Examples in Which a Partition CAN be Filed in California
There are endless variations of ways in which co-owners can hold title in a partition action. Below are a few common iterations that our partition attorneys see in which a co-owner would be eligible to file for a partition action.
|Co-Ownership in Which a Partition Action CAN be Filed||Lesson from Partition Law|
|A and B, as tenants in common||Partition is available regardless of the manner of co-ownership (tenants in common vs. joint tenants)|
|A and B, as joint tenants||Partition is available regardless of the manner of co-ownership (tenants in common vs. joint tenants)|
|A and B, as joint tenants with right of survivorship||Partition is available regardless of the manner of co-ownership. Joint tenants means the same thing as joint tenants with right of survivorship.|
|A, an individual, owns the property as tenants in common with 50 co-owners.||Either A or any of the other co-owners can file a partition since they are co-owners. It doesn’t matter how many co-owners there are.|
|A, an individual, owns the property as tenants in common with 50 co-owners, all of whom disagree with A’s desire to file a partition.||Either A or any of the other co-owners can file a partition since they are co-owners. It doesn’t matter if the other co-owners also want a partition action as the court will not force A to be a co-owner, but will instead sell the property to the extent it cannot be divided in a partition in kind.|
|A, an individual, holds a 1% interest in a property as tenants in common with B, who owns a 99% interest.||Either A or B can file a partition since they are co-owners. The percentage of co-ownership is irrelevant.|
|A, an individual, and B, as Trustee of the John Doe Trust, tenants in common||Partition is available regardless of who may be the beneficiary under the John Doe Trust.|
|A, an individual, and B, as Trustee of a trust that was not properly formed, tenants in common||Partition is available regardless of whether a co-owner, like a trust, has issues with formation, legal effectiveness, or other problems with its internal affairs.|
|A, an individual, and B Corp., a corporation, tenants in common||Partition is available, even when one of the co-owners is a corporation.|
|A, an individual, and B Corp., a corporation, tenants in common, where A is the President of B Corp.||Partition is available, even when one of the co-owners is a corporation, and regardless of whether the same person could act on behalf of both co-owners.|
|A, an individual, and B Corp., a corporation, tenants in common, where A is the sole shareholder of B Corp.||Partition is available, even when one of the co-owners is a corporation, and regardless of whether the same person holds the ultimate beneficial interest on behalf of both co-owners. Perhaps the corporation owes offsets to the individual, or perhaps the corporation has debts that must be paid.|
|A, an individual, and B, who is deceased, tenants in common||Even if A could file a probate action on behalf of B, A might choose the easier remedy of partition. Partition law even provides a specific manner of serving a deceased co-owner.|
|A, an individual, and B, a suspended corporation, tenants in common||A is entitled to file a partition, regardless of whether B is suspended. The law provides that B would not be entitled to file or defend a lawsuit while B’s taxes remain unpaid. Cal. Rev & Tax Code § 23301.|
|A, individually, and B, as trustee of the B Revocable Living Trust, tenants in common. B is a nutcase who never pays the mortgage, is being sued by 5 different people, threatens everyone who comes on the property, and threatens to disinherit A if A files a partition.||Either A or B can file a partition since they are co-owners. None of the facts mentioned in this example change that result. The internal affairs of a co-owner make no difference on whether there is a co-ownership of the property, which is effectively all that is required for a partition.|
|A, individually, and A, as Trustee of the XYZ Irrevocable Trust.||Despite A holding the legal power on behalf of himself or herself and holding that power on behalf of a trust, there may be reasons that A, as trustee of an irrevocable trust, may seek the protections of a court to ensure that the property is fairly divided. For example, perhaps A granted one-half of the property to an irrevocable trust, but made improvements to the property that A seeks to have adjudicated as an offset in favor of A individually. Or, perhaps A wishes to buyout the interest of the XYZ Irrevocable Trust through a partition by appraisal with a court order to provide protections from A being sued by the beneficiaries of the XYZ Irrevocable Trust. This issue might arise where A formed the XYZ Irrevocable Trust, but later decided it was a bad idea.|
|A and B, who is the father of A, tenants in common, but then B passes away in the middle of the partition case, thereby making the ownership A and the estate of B.||The partition can continue. A personal representative must be appointed on behalf of the Estate of B, even if A would be the only beneficiary of the Estate of B, since someone must still sign on the deed on behalf of the Estate of B as the co-owner of the property.|
|A, individually, and B as Successor Trustee of the John Doe Trust, which leaves the John Doe Trust’s interest in the property to A. However, B refuses to transfer the John Doe Trust’s interest in the property to A or is otherwise uncooperative.||A might want to speed up the administration of the John Doe Trust by filing a partition action. While A might have the right to file an action in a trust (probate) court to accomplish a similar goal, the laws and speed of a partition may be favorable.|
|A is the sole owner of the property. However, B claims that B paid for one-half of the property, but that A refuses to transfer one-half of the property to B. To the extent B was a co-owner, B would want the property sold.||A partition action can encompass a claim that a co-owner is not of the deed. Courts and attorneys may refer to this a quiet title action, a constructive trust, a resulting trust, equitable title, equitable ownership, or otherwise. The court in a partition action can both declare B to be a co-owner of the property and order the property to be sold. This speeds up the process of B being paid for their equity in the property.|
|A and B own a property where B leases the property to a business owned by B.||A partition action can be filed by A, despite B leasing the property to B’s business. See Buhrmeister v. Buhrmeister (1909) 10 Cal.App. 392.|
|A and B own a property where B leases the property to a third party.||A partition action can be filed by A, despite B leasing the co-owned property.|
Examples of Partitions that CAN be Filed, Even if There Are Other Remedies
Note that there are times where a partition is available, even if there are other remedies under the law.
For example, perhaps A and a corporation entirely owned by A co-own a property. Under California law, when a corporation is dissolved, the property would normally be distributed to the owner (shareholder for a corporation; member for an LLC). However, there may be reasons while a partition is preferred. For example, perhaps the corporation has creditors, and A seeks a court order that A indeed had rights to offsets against the interests of the corporate co-owner, meaning A will get more than their fractional ownership interest in the proceeds
Irrelevant Facts Do Not Change the Right to Partition
The examples above illustrate a few general principles as to when a partition action can be filed.
First, the manner of co-ownership doesn’t matter, meaning that tenants in common and joint tenants can file a partition action.
Second, it also doesn’t matter the percentage of ownership by the filing co-owner, meaning that the owner of just 1% of a property can file a partition.
Third, the type of property or activity occurring on the property doesn’t matter. It is irrelevant whether the property is a residence, a farm, a commercial building or otherwise. All of these properties can be partitioned.
Fourth, it doesn’t matter what happens to your co-owner. Your co-owner may be dead, a suspended corporation, a trust in which you are the beneficiary, or otherwise. All that matters is that there are multiple co-owners of the property. These matters should not stop the partition action from proceeding.
Fifth, the occupation of the property doesn’t matter. Regardless of whether your co-owner rented out the property, occupies it themselves, runs a business at the property, or the property suffers from some serious detriment, each co-owner has the right to a partition.
Finally and most importantly, the court in a partition will not weigh whether or not the partition seems “fair” for the parties. Rather, “if the party seeking partition is shown to be a tenant in common [or joint tenant],…the right to partition is absolute, and cannot be denied…because of any supposed difficulty….” Priddel v. Shankie (1945) 69 Cal.App. 2d 319, 325.
Partition Solves Many Co-Ownership Issues
Indeed, case law has made clear two main reasons that co-owners must file partition actions: “Partition is a remedy much favored by the law. The original purpose of partition was to permit cotenants to avoid the inconvenience and dissension arising from sharing joint possession of land. An additional reason to favor partition is the policy of facilitating transmission of title, thereby avoiding unreasonable restraints on the use and enjoyment of property.” LEG Investments v. Boxler (2010) 183 Cal.App.4th 484, 493.
When the courts refer to “the inconvenience and dissension arising from sharing joint possession of land,” this includes that the are few buyers of a fractional interest in property. Indeed, on the open market, few people will pay 50% of the value of a property to become a 50% co-owner with a stranger. Rather, they will demand a discount because no co-owner has complete control of co-owned property. This may be seen as a type of minority discount. Indeed, even the owner of a 99% interest in real property cannot demand a control premium since the law of co-ownership does not dictate any form of majority control.
When a court note that another reason for a “partition is the policy of facilitating transmission of title, thereby avoiding unreasonable restraints on the use and enjoyment of property,” this refers to the fact that a title insurance company will not issue a title insurance policy in the sale of the entire property unless all owners sign on the deed. LEG Investments v. Boxler (2010) 183 Cal.App.4th 484, 493. This means that an uncooperative co-owner can try to use their refusal to sign the deed as leverage to extract an unfair advantage against their co-owner. The court process of a partition allows the judge’s signature to replace that of the uncooperative co-owner to ensure that every co-owner has the ability to exit the co-ownership without the permission of their co-owner(s).
A Partition CANNOT be Filed for Divorcing Couples in California
There is only one statutory exception in which co-owners cannot file a partition, but instead must file their action in divorce court (family court). Specifically, Code of Civil Procedure 872.210(b) provides that “an action between spouses or putative spouses for partition of their community or quasi-community property or their quasi-marital interest in property may not be commenced or maintained under this title.” Below are examples of cases in which a partition action cannot be filed.
|Co-Ownership in Which a Partition Action CANNOT be Filed||Lesson from Partition Law|
|A and B, husband and wife as tenants in common||Partition is not available since A and B presumably hold the property as community property. The property must be divided in a divorce, legal separation or in some other manner, but not in a partition action.|
|A and B, husband and wife as joint tenants. Both A and B are alive.||Partition is not available since A and B presumably hold the property as community property. The property must be divided in a divorce, legal separation or in some other manner, but not in a partition action. This rule does not change regardless of whether they hold title as tenants in common or as joint tenants.|
A Partition CANNOT be Filed Because One Party is on the Mortgage, But Not on Title
Another rare example of a case in which a partition cannot be filed is when a party, for whatever reason is only on the mortgage, but not an owner of the property.
For example: A is the sole owner of record for the property. However, A and B are on the mortgage, and B wants to remove themselves from the mortgage on the property. Most likely B was a co-owner of the property when it was acquired, but signed a deed transferring B’s interest in the property to A. Perhaps B just thought of themselves as a co-signer for the mortgage. Perhaps B even made all of the mortgage payments. Unfortunately, the partition statutes do not provide for a remedy unless B claims to be a co-owner of the property, which will be hard given the presumption that record title reflects the ownership of the property.
A Partition Cannot Be Filed for Parties Who Hope to Co-Own Property
The tricky situations arise when parties expect and hope to become co-owners, but that right has not yet ripened through a recorded deed.
Do Trust Beneficiaries and Heirs in Probate Have a Right to Partition Before the Deed of Co-Ownership is Recorded?
One of the most common questions we are asked is as follows: A is the successor trustee of the XYZ Trust, which owns 100% of the property. The beneficiaries of the XYZ Trust are B and C. However, A is taking what seems like forever to administer the XYZ Trust.
Can anyone file a partition? The answer is probably that neither A, B, nor C can file for a partition action. That is because none of them are co-owners. B and C merely hope to obtain a co-ownership interest in the Property. This issue is appropriate for a probate issue where B and C may request that A be removed as the successor trustee for failing to do his or her job. Note that there may be differing opinions as to the effect of Code of Civil Procedure Section 873.830.
The same issue arises when a 50% shareholder of a corporation or 50% member of an LLC expects to own real property owned by the entity. While those shareholders or members may hope to receive a 50% interest in the real estate owned by those entities upon dissolution, the remedy of those shareholders or members lies within the laws governing corporations and limited liability companies.
While the LLC is active: “A member in a limited liability company…holds no direct ownership interest in the company’s specific property.”15A Cal. Jur. 3d Corporations § 1038. California Jurisprudence cites Swart Enterprises, Inc. v. Franchise Tax Bd., 7 Cal. App. 5th 497, 510, 212 Cal. Rptr. 3d 670, 679 (2017) (citing to former Corp. … Continue reading Indeed, “under California law a limited liability company is a separate and distinct legal entity from its owners or members. Consequently, limited liability company members have no interest in the company’s assets.” In re Schaefers, 623 B.R. 777, 783 (B.A.P. 9th Cir. 2020). However, upon dissolution, an LLC can distribute its assets “[t]o members in the proportions in which those members share in distributions.” Cal. Corp. Code § 17707.05(a)(3).
As for a corporation: “The owner of the shares of stock in a company is not the owner of the corporation’s property. He has a right to his share in the earnings of the corporation, as they may be declared in dividends, arising from the use of all its property. In the dissolution of the corporation he may take his proportionate share in what is left, after all the debts of the corporation have been paid and the assets are divided in accordance with the law of its creation. But he does not own the corporate property.” Miller v. McColgan (1941) 17 Cal. 2d 432, 436. Imagine you own shares of Microsoft. This does not mean that you (or Bill Gates or any other shareholder of Microsoft) own a desk in a Microsoft office. The desk is corporate property and owned by the corporation, Microsoft.
Partnership Property Can be Partitioned
“To the extent that the court determines that the provisions of the partition statutes are a suitable remedy, such provisions may be applied in a proceeding for partnership accounting and dissolution, or in an action for partition of partnership property, where the rights of unsecured creditors of the partnership will not be prejudiced. (CCP 872.730) Accordingly, property of a partnership may be partitioned in a partnership accounting even though the property is held in the name of one partner. (Brown v. Fairbanks, 121 Cal. App. 2d 432, 263 P.2d 355 (4th Dist. 1953).)” 48 Cal. Jur. 3d Partition § 28.
Rare Examples in Which No Partition is Needed
Sometimes, the ownership of the property may reflect that there are multiple owners of a property, but no partition is needed to solve the co-ownership issues. These examples are fairly rare. If you’re reading this article, chances are, you have a co-ownership issue that cannot be solved with a magic wand.
|Co-Ownership in Which Partition is not Necessary||Lesson from Partition Law|
|A and B, as joint tenants, but B has died.||There is no reason to file a partition action. Rather, A can likely record with the county recorder an affidavit of death of joint tenant attaching a death certificate of B, which tells the public that A is the sole survivor of the joint tenancy, meaning that A is the sole owner of the property.|
|A and B, husband and wife as joint tenants, but B has died.||There is no reason to file a partition action. Rather, A can likely record with the county recorder an affidavit of death of joint tenant attaching a death certificate of B, which tells the public that A is the sole survivor of the joint tenancy, meaning that A is the sole owner of the property. The fact that A and B were once married, and that the property would have been community property had the parties divorced before B died, does not change this result.|
|A, individually, and A as Successor Trustee of the John Doe Trust, which leaves the John Doe Trust’s interest in the property to A.||There is probably no reason to file a partition action. Instead, A as Successor Trustee of the John Doe Trust can transfer the partial interest of the John Doe Trust to A, individually. Note that there may be property tax or income tax consequences to administration of a trust and recording of a deed. Contact an experienced tax attorney before proceeding under this scenario.|
Contact an Experienced Partition Attorney in California
If you want to end your co-ownership relationship, but your co-owner won’t agree, a partition action is your only option. Our experienced 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) or fill out a contact form online.
California Code of Civil Procedure 872.210 describes who is authorized to commence a partition action as:
(1) A coowner of personal property.
(2) An owner of an estate of inheritance, an estate for life, or an estate for years in real property where such property or estate therein is owned by several persons concurrently or in successive estates.
|↑2||Priddel v. Shankie (1945) 69 Cal.App. 2d 319, 325.|
|↑3, ↑4||LEG Investments v. Boxler (2010) 183 Cal.App.4th 484, 493.|
|↑5||15A Cal. Jur. 3d Corporations § 1038. California Jurisprudence cites Swart Enterprises, Inc. v. Franchise Tax Bd., 7 Cal. App. 5th 497, 510, 212 Cal. Rptr. 3d 670, 679 (2017) (citing to former Corp. Code, former § 17300 in finding that “members hold no direct ownership interest in the company’s specific property”); see Kwok v. Transnation Title Ins. Co., 170 Cal. App. 4th 1562, 1570–71, 89 Cal. Rptr. 3d 141, 147 (2009) (“As members of the LLC, appellants never held an ownership interest in the property to which the LLC held title”).|