The law favors division over sale but partition may not interfere with zoning laws or the existing mortgages.
A partition lawsuit in California allow co-owners of a property to sell or divide property so that the co-owners no longer have to be entangled with each owner.
What Is A Partition Lawsuit?
A co-owner of real property may file an action for partition, severing unity of possession in that property. This process is governed by California Code of Civil Procedure §872.010 et seq. A partition lawsuit allows co-tenants to “avoid the inconvenience and dissension arising from sharing joint possession of land and facilitates transmission of title.”
In other words, the law will not compel co-owners to remain co-owners of property. Partition lawsuits arise most commonly among family members, usually siblings, and ex-boyfriends and girlfriends. When those relationships sour, partition is usually the process required to get them out of their commonly owned property.
Partition is a complex process and parties should retain experienced real estate attorneys to handle the process for them. Even many experienced business litigation lawyers are unfamiliar with the partition process, the interlocutory judgment, the appointment of a referee, and other factors unique to partition.
What Is The Manner Of Partition?
If a party is entitled to partition, the trial is usually the beginning, not the end, of the case. At trial the court will determine ownership rights in the property and may order the manner of partition at that time.
Partition may be “in kind” or “by sale”. “In kind” refers to a physical division of the property. This is most usually done in cases involving large tracts of land without physical improvements. For example, a farm may be easily divided into two or more parcels of essentially equal value without prejudicing one of the co-owners. “By sale”, of course, refers to the sale of the property with the proceeds divided among the co-owners.
How Does A Court Decide Between “In Kind” and “By Sale”?
California law states that partition may be “in kind” or, if it would be more equitable, “by sale”. Partition in kind is favored since it does not compel a person to sell his property against his will. However, in most urban settings, partition in kind is not possible and so the law allows a court to order partition by sale. Partition in kind, for example, is typically not possible in a case involving a single-family residence in an urban or suburban setting. The only possible choice is to sell the entire property.
Moreover, there are instances where the value of the divided parcels will not equal the value of the whole parcel. Or government zoning restrictions or existing mortgage obligations may not allow a division in kind.
Real estate attorneys who handle partition lawsuits in Los Angeles and throughout California should realize, however, that the party seeking partition bears the burden of proving that a sale is more equitable than physically dividing the property. A 1976 revision to the partition laws expanded the availability of partition sales but does not allow a partition sale in the absence of sufficient proof of the equities of such a method of partition.
What Evidence Justifies A Partition Sale Rather Than Division?
There are two types of evidence which have been held sufficient to justify a partition sale of property rather than physical division. The first is evidence that the property cannot be divided into subparcels of equal value. The second is economic evidence that dividing the land would substantially diminish each party’s interest. Either type of evidence is sufficient.
The experienced property lawyer will recognize that a partition proceeding is statutory in origin but it is one in which the trial court makes its ruling based on equitable considerations. This affects the appeal of a finding in a partition action in that the appellate court will review a trial court’s interlocutory judgment of partition by sale for an abuse of discretion.
A Partition Order Cannot Violate The Subdivision Map Act
Real estate litigation attorneys may not use an unpublished opinion in the California Court of Appeals as authority in a brief before the court. However, these court opinions are helpful in handling a partition lawsuit. In a recent unpublished opinion entitled Dorfman v. Carter (2021 WL 3561360) out of San Francisco, the appellate court reviewed a trial court’s interlocutory judgment ordering partition by sale of a triplex within the city. The case is instructive.
The appellate court held in that case that undisputed evidence showed that physically dividing the triplex would be impossible or highly impractical in light of local subdivision ordinances and the deeds of trust. It affirmed the trial court’s ruling. Here are a few notes helpful to all litigation attorneys who handle partition lawsuits.
Any partition must comply with any applicable laws, regulations, or ordinances governing the division of property. (§872.040). In this case the court addressed the Subdivision Map Act, which governs the subdivision of real property in California. The court notes that landowners seeking to divide property must obtain city or county approval of the subdivision.
In this case the San Francisco Subdivision Code strictly limits residential unit “conversion”—subdivision which changes the type of ownership of real property to that defined as Condominium project. This Code establishes a limit on conversions and a lottery system for awarding that right. Moreover, no applications will be accepted and no lottery will be conducted before 2024.
The court held that since the two co-owners could not even submit any application to convert the property until 2024, a “division into subparcels of equal value cannot be made.” One party then argued that the Director of the Department of Public Works in San Francisco has discretionary authority to grant relief from the conversion requirements if the property fulfills certain criteria. However, this was an argument that was never made in the trial court and was deemed forfeited. Moreover, there was no evidence in the case that this property would qualify for the relief.
A Partition Order Cannot Unlawfully Interfere With The Rights Of Lienholders
California case law states that a partition cannot unlawfully interfere with the rights of lienholders. In most cases this refers to the mortgage holders.
In the Dorfman v. Carter case the parties had a mortgage on the property. The deed of trust for the first priority lien states that the parties would face default if a civil proceeding could result in a “material impairment” of the Bank’s interest in the property or its rights under the deed of trust. “Physically dividing the property and splitting [the bank’s] lien and security for the debt thus violates the plain terms of the deed of trust and would seriously impair if not utterly destroy the respective obligations of the [mortgages].”
Moreover, the court questioned how, if the property were divided but both debtors remained responsible for the full amount of the loan, allowing each subparcel owner to remain jointly and severally liable for the full amount of the debt fulfills the purpose of partition, which is to sever the unity of possession and disentangle the parties’ ownership interests. The court found that it would not fulfill the purpose of partition.
Partition in Kind or Partition by Sale: Get Advice from Los Angeles Real Estate Litigation Attorneys
For Los Angeles partition lawyers most cases will not involve division over sale simply because most Los Angeles property disputes involve indivisible urban parcels and properties that are not conducive to division. However, the trial attorney should recognize that he or she is still obligated to put on evidence showing that sale is more equitable than division.
In cases where division is being sought, all of the lawyers should make sure to review the deed of trust and consider whether division would interfere with the lienholder’s rights.
Because division will almost always involve unequal parcels, partition by division is a perfect candidate for a thorough mediation with experts present so that all of the possible alternatives can be properly considered and vetted.
Los Angeles real estate litigation lawyer Laine T. Wagenseller is the founder of Wagenseller Law Firm in downtown Los Angeles. The partition attorneys at Wagenseller Law Firm have extensive experience in handling partition lawsuits. For more information please call (213) 805-7445 or visit our website at wagensellerlaw.com.