Mon, June 8th, 2009
When is a Partition Not Allowed
I described a partition in my last post. Normally, partitions are allowed by the court, under the age-old view that property should be freely alienable. But when is a partition not a proper remedy to sell or transfer one’s interest in property?
The first and most logical example is where the owners agreed to limit this option ahead of time. Led in part by a famous case back in the sixties or seventies involving a citrus orchard, the rule still stands that one person cannot force another person to part with their property when they already have an agreement in place to keep the property.
Now keep in mind when you start a business relationship with someone involving land, that restrictive agreements like the one I just described do not usually come by way of a straightforward agreement entitled “Agreement Not to Partition Property”. Instead, the restriction usually shows up as one or two sentences, or a small section, in another agreement between the owners. Such as a partnership agreement, or a farm management agreement (for an orchard or farm), or even a tenancy-in-common agreement.
When more than one person, or business, buy property together, they usually go into it thinking “we’ll keep this for a long time”, not expecting things to change, at least not soon. So some type of language is put in the agreement, and there you go, the parties are tied to each other and the land.
The flip side is important to keep in mind, too. If you are sure that you do not want your co-owner making waves, you may want to make sure there is some sort of restrictive language in your agreement, preventing a partition.
Posted by Nick Yonano at 09:56
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Labels: lis pendens, partition, title dispute
Thu, June 4th, 2009
A Partition in California: Experts in Real Estate are Critical
Many property owners, and yes, this may include owners of personal property as well, resort to the partition process set forth in the Code of Civil Procedure, as a means to part ways with their ownership of property in California. In a partition, one (or more) holder of interest in real estate files an action to start the process. He or she must also file what is called a “lis pendens”, which is a notice to the public that a potential case affecting the property, is in court. This lis pendens is recorded at the county recorder’s office, and puts potential buyers on notice that what they may be purchasing has certain claims involving it.
Once an answer to that complaint is filed, by all those served and named in the lawsuit, the parties will proceed with the process of partitioning the property. If it can be divided, a partition may be handled in that manner, but normally that is not the case when there is a single-family residence involved. A partition in kind normally applies where there are divisible lots owned by multiple persons/entities. If a sale is necessary, one party, often a defendant, will plead to the court to purchase the property. If that’s the case, an appraiser and often a real estate broker or three is brought in, to help determine a figure for the purchase. When a number is arrived at by the experts, if the parties agree, then the sale can take place without a court order. If not, then the battle of experts may begin to take place. Each party may want his/her own expert to testify to the court about the value of the property.
At some point, the property is sold, and in most cases, to a third party on the open market. A partition action usually will include an action for an accounting, where the owners may contend that the other person contributed less than he/she did, or withdrew in profits more than he/she did. This may mean that accountants become involved as well. So the experts have their say in not only how the price gets determined, but in how the money is divided as well.
I make it sound more complicated than it really is. Actually, since there is not too much fact-finding in your typical partition case, there isn’t much of a need for depositions and extensive discovery. The cost can be reduced if that is the case.
Yes, not the ideal way to part with property, but often a necessary solution.
Posted by Nick Yonano at 08:45
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Labels: land, lis pendens, partition, property value, real estate, title dispute
Thu, June 4th, 2009
A Partition Is Often the Best Last Resort
The right to alienation is alive and well as far as courts in California are concerned. Whether real property is held in a joint tenancy or as a tenancy in common, the property owners have a right, with fair limitations, to transfer or sell their interest. One limitation is where the property owners have a written agreement among themselves to NOT sell the property. Unless there is a restriction, the owners usually work together to sell the property, either to one of the owners in full, or to a third party. If this is not feasible, perhaps where there is a dispute as to value or something else, one or more of the parties may resort to filing a court action to “partition” the property. That is, have it sold.
A partition is a civil action to have property sold by court order. A partition action requires a property owner as a plaintiff and all other property owners named as defendants. It can be a costly option, but the filing of this action will often propel the owners to work together to get the property sold. My next few posts will cover a few of the problems that arise in partition actions, as well as a few unique situations where a partition was useful.
Posted by Nick Yonano at 03:16
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Labels: land, lis pendens, partition, real estate, title dispute
Thu, October 18th, 2007
Lis Pendens: To Expunge or Not to Expunge
The lis pendens is in some respects, a provisional remedy, that is, a remedy used by a party in litigation prior to a trial or resolution of the whole case. Some courts consider it in another respect, a notice. I won’t say “just a notice”, because it’s effect is greater than just notifying a would-be buyer or transferee that the property is the subject of litigation. In most cases, it simply brings to a halt any effort made by a seller/defendant to transfer or sell the property, since no transferee would voluntarily assume a problem like this.
Does that mean it’s a weapon? No, just a tool. And a tool only to be used when there is a sincere concern that possession or title to the property could be lost forever. And a sincere belief (because in most cases this will have to be proven to a judge in a motion to expunge the lis pendens) that the plaintiff will prevail at trial on their action, and the action involves title to or possession of the property.
It’s the latter point, the action must involve title to or possession of real property, that is the subject of most disputes in court over whether a lis pendens was properly filed. Sure, the case itself must have merits, but it must specifically address title or possession.
For example, a suit over money owed from A to B should not involve a lis pendens over A’s property unless the money involved a sale from B to A of real estate and A can show that he/she was defrauded out of his/her property, or something of that nature. Court’s understandably so, are reluctant to uphold a lis pendens unless there is a real property claim and the claim has merits.
So if you’re property is tied up by a lis pendens, or you’re looking at filing and recording a lis pendens in conjunction with a complaint, look carefully at when and why this is allowed.
Posted by Nick Yonano at 07:23
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Labels: expunge, lis pendens, real estate
Thu, October 18th, 2007
A Delicious Break from Court
I’m having lunch in downtown San Jose before a court hearing yesterday (at a wonderful cafe named Cafe Rosalena) and I leave with a loaf of cinnamon bread from the bakery next door. Turns out that I took home a very popular, amazing cinnamon bread. Since I don’t live in San Jose, or anywhere in the bay area for that matter, I would be out of luck if I wanted more of this delicious bread, at least until my next trip to the west. But I’m in luck, and so is anyone else who discovers this bread. Not only is it available at many local stores that have discovered it, but you can order it online. It’s called Greenlee’s Bakery. It’s on The Alameda, about 1/2 mile west of HP Pavilion.
What’s this have to do with real estate? Well, my hearing was on a motion to expunge a lis pendens. That’ll have to do for now. More on the realities of filing a lis pendens, and having a lis pendens removed, in later posts.
Posted by Nick Yonano at 02:22
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Labels: lis pendens
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