What is a Partition Action in California?

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.

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

1. 1. 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.
   2. 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.
   3. 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.
   4. 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.

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….”

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.”

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. 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.

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.

Do Shareholders of a Corporation or Members of an LLC Have a Right to Partition Before the Deed of Co-Ownership is Recorded?

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.” 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.

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.