PARTITION OF REAL ESTATE
By: Roman P. Mosqueda, Esq.
You and your business partner, or another family member, relative or friend, bought a residential or commercial property for one or both to live in, or for investment purposes.
Both of you may or may not have executed a written Partnership Agreement, or agreed orally on a joint venture.
Title to the property in the Grant Deed is taken in the names of both of you as joint tenants with right of survivorship, or tenants-in-common (coowners) without right of survivorship.
One of you wants to sell the property now, but the other does not want to. Each of you owns one-half interest in the property.
What is your legal relief? It is an action for partition filed with the Superior Court of the State of California in the County where the property is located.
Community Ownership:
The ownership of property in California (Section 682 of the Civil Code) by several persons is either:
1. of joint interests;
2. of partnership interests;
3. of interests in common;
4. of community interest of husband and wife.
A joint interest is one owned by two or more persons in equal shares, by a title created by a single will (or living trust) or transfer (grant or gift deed), when expressly declared therein to be a joint tenancy (Section 683 of the Civil Code).
Joint tenancy has the right of survivorship (the surviving joint tenant acquires automatically the interest of the deceased joint tenant at the time of death), unless the right of survivorship is terminated before the death of either joint tenants (Section 683.2 of the Civil Code).
A partnership interest is one owned by several persons in partnership, for partnership purposes (Section 684 of the Civil Code).
An interest in common is one owned by several persons, not in joint ownership or partnership or community property (Sections 685 and 686) of the Civil Code).
Community interest of husband and wife in community property, when expressly declared in the transfer document, with right of survivorship, passes to the surviving spouse upon the death of the other spouse without administration, just like in joint tenancy (Section 682.1 of the Civil Code).
But prior to the death of either spouse, the right of survivorship may be terminated, pursuant to the same procedures by which a joint tenancy may be severed, and the right of survivorship terminated, by:
1. written instrument effecting severance recorded in the county where the real property is located;
2. or such instrument acknowledged before a notary public by the severing joint tenant not earlier than 3 days before the death of that joint tenant, and recorded in the county not later than 7 days after the death of the severing joint tenant (Section 682.1(a) in relation to Section 683.2(c)(1) and (2) of the Civil Code).
As a matter of practice, business partners may take title as joint tenants, or as tenants-in-common (interests in common). Or they may initially be joint tenants, and then one may change his/her one-half joint tenancy interest to one-half tenancy-in- common to severe the joint tenancy, and thereby terminate the right of survivorship.
Option To Purchase
Partnership Interest:
As stated above, a joint tenant or tenant-in-common or even a partner wants to sell his/her interest in the real property, but the other does not want to.
A client of the Author entered into a Partnership Agreement with a business partner, which governs the disposition of the joint tenancy interests of both partners in a property in Lawndale, California, pre-empting the jurisdiction of the Superior Court to order partition.
The other partner, as joint tenant, then changed her ownership as tenant-in- common, and filed a Complaint for Partition. Representing his client as the other coowner, the Author filed the Answer, invoking lack of jurisdiction of the court because the parties had entered into a Partnership Agreement, which governs the disposition of the subject property.
Indeed, the Partnership Agreement provides the remaining Partner with an option to purchase the interest of a withdrawing partner for the value of that Partner’s interest, determined as provided in the Partnership Agreement. And the remaining Partner has given notice of the exercise of the option to purchase the partnership interest of the withdrawing Partner in the subject property.
In any event, the partners agreed to sell the subject property through their respective counsels, who are both real estate brokers, including the Author, after mediation, sold the property, and dismissed the action for partition on or about March 5, 2004, before Superior Court Judge James C. Chalfant, Department 13, Central District, County of Los Angeles.
Complaint for Partition:
Under Section 872.210(a) of the California Code of Civil Procedure, a partition action may be commenced and maintained by any of the following persons:
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.
If it is necessary to have a title report, the plaintiff may, prior to commencing the partition action, procure a title report, and shall indicate in the complaint that this has been done, and designate a place where it will be kept for inspection, use, and copying by the parties.
Or the court may, upon application of a party, authorize the party to procure such a title report (Section 872.220 of the Code of Civil Procedure).
The Complaint for Partition shall set forth:
1. the legal description of the real property that is the subject of the action and its street address or common designation;
2. all interests the plaintiff has or claims in the property;
3. all interests of record or actually known to the plaintiff that other persons have or claim in the property;
4. the estate as to which partition is sought and a prayer for partition of the interests therein; and
5. if plaintiff seeks the sale of the property, an allegation of facts justifying such relief (Section 872.230 of the Code of Civil Procedure).
Immediately upon filing the complaint, the plaintiff shall record a notice of the pendency of the action in the county recorder in which the subject property is located (Section 872.250(a) of the Code of Civil Procedure).
Appointment And Authority
Of Referee(s):
The court may appoint a referee to divide or sell the property as ordered by the court (Section 873.010 of the Code of Civil Procedure).
The referee or three referees may perform any acts necessary to exercise the authority conferred, or by order of the court (Section 873.060 of the Code of Civil Procedure).
A referee may, with the approval of the court, employ an attorney, surveyor, and/or auctioneer to conduct a public auction, or other third person (Sections 873.120, 873.130, 873.140 and 873.150 of the Code of Civil Procedure).
The subject property may be ordered by the court to be divided by the referee, according to the interests of the parties in the property (Section 873.210 of the Code of Civil Procedure).
Or the subject property may be sold at public auction or private sale, as the court determines will be more beneficial to the parties, taking into account any referee’s report thereon (Section 873.520 of the Code of Civil Procedure).
But notwithstanding any other provision, the court shall order sale by such methods and upon such terms as are expressly agreed to in writing by all the parties to the action (Section 873.600 of the Code of Civil Procedure).
(The Author, Roman P. Mosqueda, a real estate attorney and real estate broker, has personally represented plaintiffs, as well as, defendants in partition actions with the Superior Courts of the State of California.)