Real estate litigation attorneys in Los Angeles must be familiar with partition lawsuits. A partition lawsuit is needed when co-owners of real property cannot agree on how to separate.
What is partition?
Real property is often owned by two or more owners. Brothers and sisters may own the old family home. Family members may have inherited an apartment building or other commercial property. Business partners may buy the building in which their business is located. These co-owners are often called tenants-in-common.
When a tenant in common decides that he or she does not want to co-own the property anymore, all of the owners must agree on a way to “break up.” However, if the co-owners cannot agree, a partition lawsuit is appropriate.
How does a partition lawsuit proceed in Los Angeles?
For properties located in Los Angeles County, a partition action will almost always be filed in the Los Angeles Superior Court. For real estate attorneys who handle partition lawsuits, the partition process is governed by California Civil Code sections 872.010 et seq. For real estate owners who are not familiar with the partition process, this article will explain the process in depth.
Do you need a lis pendens, restraining orders and/or injunction?
The first thing a real estate attorney should consider is whether the property is safe in the short term. Immediately upon filing the lawsuit in the Los Angeles Superior Court, the plaintiff must also record a notice of the pendency of the action in the Los Angeles County Recorder’s office. This notice (or “lis pendens”) puts the world on notice that there is a lawsuit affecting the ownership of the property. The lis pendens should prevent a sale of the property during the litigation.
If a party is worried about protecting the property, he or she may seek a restraining order and/or injunction in order to prevent waste or protect the property. This is usually done upon the filing of the lawsuit and may even be done without notice to the opposing parties if there is sufficient justification.
How do you prepare a partition lawsuit?
The partition complaint must include (1) a description of the property (usually including the street address and the legal description), (2) what interest the plaintiff claims in the property, (3) what interests others may claim in the property, (4) the estate to which partition is sought and a prayer for partition, and (5) if sale is requested, an explanation as to why such relief is appropriate. As noted above a lis pendens must also be filed with the complaint and recorded with the County.
In a partition lawsuit the complaint must name everyone who has an interest in the property. This includes those known to the plaintiff and those whose claim is reasonably apparent from an inspection of the property. The caption of the pleadings will usually include “and all unknown persons claiming an interest in the property.”
The lawsuit must then be served on all of the defendants.
The court will then determine a right to partition
The first step in partition litigation is to determine whether the plaintiff has a right to partition. Partition is usually a matter of right, but a party can waive his or her right to partition. The court will look to see if partition is barred by a valid waiver.
The court will then issue an interlocutory judgment. The interlocutory judgment sets forth the interests of the parties in the property, orders the partition of the property and usually determines the manner of partition. In almost all situations the right to partition and the parties’ interests in the property are not disputed. In a partition lawsuit involving experienced partition attorneys, the parties can often stipulate to an acceptable interlocutory judgment without the need for a “trial.”
Hiring a partition referee
After the interlocutory judgment the court will appoint a referee to divide or sell the property. The parties must consent to the appointment of the referee. The court may instruct the referee on his or her duties. If you thought that attorneys’ fees were expensive, the co-owners must now pay the referee’s fees. The referee bills hourly, just like the attorneys, and as a court-appointed referee, the referee has very little incentive to keep the billing low. The referee also has wide latitude to deal with the partition.
When undeveloped land is being divided in partition, it is often necessary to create access to the newly divided property. Under Civil Code section 873.080 the referee has the ability to designate a portion of the property as a public or private way, road or street. When dividing land the referee (and the parties) will also have to look at land use and zoning restrictions in the area to determine what is feasible and allowable when creating smaller lots. Because of this the referee may also need to employ an attorney to assist. The employment of an attorney by the referee must be approved by the court after a written submission. The referee may also hire a surveyor and/or an auctioneer to assist. The referee will prepare status reports and a final report for the trial judge.
Partition by division
The manner of partition in a Los Angeles partition lawsuit is set forth in California Civil Code sections 872.810 et seq. The first section states that the property will be divided among the parties according to their interests. California case law indicates that division is to be preferred over sale if possible. The question then becomes when is division possible? In most Los Angeles partition lawsuits the property includes a building—a single-family residence, an apartment building, a retail store or some other structure. Moreover, the property is also often one legal plot. Division is often not a possibility in most partition disputes involving urban buildings and property. However, plots of land can be divided and, if one or both of the parties seek to keep their share of the land, partition by division is a possibility. The court can even decide upon partial division and sale.
Partition by division can be difficult in the sense of pleasing both or all of the co-owners. A partition by division must take into account whether portions of the land are more valuable than other portions. Partition by division is done by value rather than an equal amount of square footage. The language of the Civil Code states that a referee shall divide the property “quality and quantity relatively considered.”
The division of the co-owners’ land should allot improvements to the party who made the improvements if possible “and to the extent it can be done without material injury to the rights of the other parties.” If there were prior sales to one of the co-owners, any division should take that into account and make the division contiguous to the previously purchased property. If the land is already divided by legal lots, the division should be by already designated lots if possible. Lastly, if an equal division is not possible, the referee may suggest and the court may order that one party pay the party or parties in order to equalize a proposed division.
Partition by sale
Partition by sale occurs when the parties agree to sell the property or the court decides that sale and division of the proceeds is the better outcome. Partition by sale is markedly easier since it is money that is divided, not property.
The court can order the property to be sold either by public auction or by private sale (or a mixture of both if needed). The parties can agree on the manner of sale, but if they do not, the court will determine the manner, terms and conditions for the sale. Sale by public auction is an open auction, while a private sale involves the submission of bids to the referee by a deadline. The parties may participate in the sale (but the referee, the attorneys and any guardians of a party may not).
The referee will report to the court and the court may confirm or deny the sale. A new bidder may submit an additional higher bid at the court hearing and the court may consider it.
Parties to a partition lawsuit should remember that the proceeds of the sale will pay for the expenses of the sale, payment of the partition (including the referee) and payment of any liens on the property (e.g., mortgages and other liens) before any proceeds are distributed to the parties.
Partition by appraisal
The parties to a partition lawsuit in Los Angeles may agree to a partition by appraisal. The Los Angeles real estate litigation attorneys can prepare an agreement in writing which sets forth the description of the property, the names of the parties and their interests in the property, the name of the referee to whom the parties have agreed, the date of the transfer and any other terms and conditions.
The court may then determine that the agreement is equitable and approve it. Approval will stop any pending division or sale of the property. The court’s order shall be conditional upon performance, such as payment of the purchase price. This new provision of the Civil Code relating to partitions allows the court to refuse to permit consummation of a transaction where the court determines it to be inequitable.
Costs of partition
Partition can be an expensive process. The costs include attorneys’ fees necessarily incurred by a party for the common benefit in prosecuting or defending other actions or other proceedings for the protection, confirmation or perfection of title, setting boundaries and making a survey. The court will apportion the costs of the partition among the parties based upon their percentage interests, but the court also has the ability to apportion costs as it feels may be more equitable.
Partition without litigation
The official partition process described above should leave both real estate attorneys and co-owners recognizing that partition through the courts is a long and expensive process that could be accomplished outside of court. The parties typically do not dispute the percentage of interests held by each party. Partition is usually by right so there is usually no question that partition will happen. The remedies in a partition lawsuit are clear—sale or division. In light of this co-owners and their attorneys should explore the possibility of reaching a mutually agreed upon settlement rather than engaging in litigation. The parties can hire their own surveyors and real estate brokers. Moreover, the parties and their attorneys can accomplish all of these things faster than any process ordered by the court.
When the parties and their attorneys understand the partition process in Los Angeles, there is a better chance of reaching an agreed-upon resolution without the need for partition litigation and extensive attorneys’ fees.
Laine T. Wagenseller is the founder of Wagenseller Law Firm in downtown Los Angeles. The firm handles business and real estate litigation in the Los Angeles Superior Court and throughout Southern California. He can be contacted at (213) 286-0371.
