If you own real estate with others and can’t agree on what to do with it, a partition action may be the best resolution. Ideally, you will negotiate and agree upon a solution. If you can’t, a judge can decide the outcome.
If Co-Owners Can’t Resolve Disputes on Their Own, a Court Can Do It for Them
These disputes often come up when:
- Fellow investors disagree about what to do with the property
- An unmarried couple jointly owns property, and they’re splitting up
- Multiple beneficiaries of an estate receive title to the same property
In California, a co-owner has the right to sell jointly owned property. If a partition action is filed, the goal is to have the parties use a portion or interest separately, but that’s not always a fair or practical approach. A court could:
- Divide the property
- Sell the property and divide the proceeds
- One party purchases the other’s interests based on the property’s appraised value
If the co-owners are a married couple ending their relationship, and the real estate is marital property, the issue would be resolved through the divorce process.
Property Will Be Divided or Money Will Be Paid
Splitting property, so each party is the sole owner of a smaller piece, works better with raw land than a home or a building. If that’s not the correct resolution, the other owners, who don’t want to sell, must have the opportunity to buy out that party before the property goes up for sale (a right of first refusal).
During the legal process, the court would order an appraisal to determine the fair market value unless the parties agree to an amount or another evaluation method. If there’s an appraisal, the court notifies the parties of the appraised value. The defendants have 45 days to give notice they intend to buy out the party filing the action and 60 days to get financing.
If they decide not to buy the co-owner’s share or can’t arrange financing in the required time frame, the court would order a sale and split the proceeds. This is the most common outcome in these situations.
A court will split the proceeding’s costs among the parties wanting to partition the property in proportion to their interests or in an equitable way. If a party controlling the property committed fraud, oppression (like holding the title to force an unfair payment or denying payment to another party), or abuse, the court can award the victim the costs they incurred, including reasonable attorney’s fees.
The state’s Partition of Real Property Act will go into effect at the start of 2023 and expands the current Uniform Partition of Heirs Property Act. The new law allows a much easier way for property co-owners to buy each other out. It applies to any real property held in tenancy in common, and there’s no agreement binding all the parties covering how the property can be partitioned.
We’re Here to Help
If you and others own property and can’t agree on what should be done, contact us at (949) 244-4207 or complete our online contact form today. We can discuss negotiating your way through this and, failing that, how a partition action could resolve the dispute.
