Co-owning real property can be a smart financial move. Until it isn’t. Whether you purchased a home with a sibling, inherited property with extended family members, or bought an investment property with a business partner, changed circumstances, priorities, or disagreements about what to do with it are more common than you might think. One co-owner wants to sell. The other wants to hold. What happens next?
California law provides a mechanism to resolve this kind of impasse: a partition action. Thanks to a 2022 law, the rules governing how these disputes play out have been modernized and expanded. AWB Law, P.C., we help property owners understand their rights and navigate co-ownership disputes, including partition actions, from start to finish. Call us at (949) 244-4207.
What Is a Partition Action?
A partition action is a court proceeding that allows a real property co-owner to force a resolution when the co-owners can’t agree on what to do with the property. Partition has existed as a legal right for centuries because co-owners need a way to exit an ownership arrangement and access their equity. But if one co-owner refuses to sell, or when the parties cannot agree on what to do, a court can intervene.
Usually, when there’s a co-owner conflict, the parties agree to sell the property, and the issue doesn’t end up in court. It could be sold to the public, with the proceeds divided among the owners, or one or more parties could sell their interests to those who want to retain ownership (usually at an agreed-upon price or an appraised value). Ideally, there’s a contract between the owners spelling out how this situation will be handled before disputes arise.
The Partition of Real Property Act: A Major Change to California Law
For nearly fifty years (since a 1976 revision), California’s partition laws remained largely the same. That changed when the California Legislature amended the law in 2021 and again with the Partition of Real Property Act (PRPA) in 2022.
It applies to partition actions involving property held in tenancy in common (each owner has a distinct fractional interest in the property and the right to seek partition), and the owners can’t agree on how to resolve the issue. If the property is held in a joint tenancy (the parties equally own the property, share rights and responsibilities, and have a right of survivorship), PRPA wouldn’t apply because its language doesn’t reference that co-ownership scheme.
1-The Mandatory Appraisal
There’s a court-ordered appraisal at the outset of every qualifying partition case. It’s done by a licensed, disinterested appraiser who values the property as if it were owned by a single person before the merits of the partition case are considered. After that’s complete, the court holds a hearing and issues a binding order establishing the property’s fair market value.
There are two exceptions:
- If all co-owners have already agreed on a valuation in writing, the court may adopt that agreed-upon figure, or,
- The court determines the fair market value through an evidentiary hearing
Whichever method is used, this valuation becomes the foundation for what follows.
2-The Cotenant Buyout Right
If the party seeking partition requests a partition by sale, the other co-owners can tell the court they want to buy the plaintiff’s share. The purchase price is calculated by multiplying the court-determined fair market value of the entire property by the selling co-owner’s fractional ownership interest.
This is simpler when there are just two co-owners. When multiple co-owners participate in the buyout, the shares are allocated proportionally among them. If a co-owner states they want to participate but fails to deposit the required funds, the other participating co-owners cover that portion in a secondary buyout round.
This process encourages negotiation and can allow families or business partners to keep the property within the current ownership group. But it can get complicated, especially if there are credits and offsets for co-owners who have been making mortgage payments, paying taxes, or contributing to maintenance.
3-Partition in Kind vs. Partition by Sale
If no buyout occurs, or if the party seeking the partition doesn’t request a sale, the court proceeds to decide the method of partition, which would be to physically divide the property into separate parcels for each co-owner according to their ownership percentage.
Before doing so, the court must consider whether partition in kind would cause “great prejudice” to the co-owners. Factors include the following,
- Whether the property can, as a practical matter, be divided
- Whether a physical split would materially reduce the total market value of the resulting parcels
- The duration of the co-ownership and any family relationship
- Sentimental or ancestral attachment to the property
- An owner’s property use and whether dividing the property would impact it
- The degree to which each co-owner has contributed to taxes, insurance, and upkeep
In practice, partition in kind is rarely available in the state’s more developed regions, on a land parcel that is small, or when a single building is involved. Physical division of land would be a subdivision under state law, so it would have to comply with the Subdivision Map Act.
It imposes extensive regulatory requirements, such as design conformity with local plans and construction of public improvements, which might make a court-ordered physical partition impractical in an urban or suburban area.
If a party requests a partition, and the judge finds it would cause “great prejudice” to the owners, the case will be dismissed, and the parties are back to square one. They could either work out their differences, or the plaintiff could re-file to force a sale.
What This Means for You
If you are a co-owner facing a dispute about the future of your property, the PRPA directly affects your options and your rights. AWB Law, P.C., helps clients handle ownership disputes, negotiate resolutions, and, when necessary, litigate partition actions across Southern California. Contact us today at (949) 244-4207 to schedule a consultation.
