Wed, June 10th, 2009
The Parties to a Partition; Trustees Included.
The headline here is mostly true. Meaning, trustees are and should be included as parties where the trust is an owner or has some beneficial interest in the subject property. There is a statute in California law, Code of Civil Procedure Section 874.240, which clearly states that the trustee of an express trust (not an implied or constructive trust) can be made a party defendant to a partition action.
The rule, California Code of Civil Procedure Section 874.210, is that any ascertainable person with any type of interest or claim, even if it is a contingent or future interest, must be named in the lawsuit in order to be bound by it. This includes an express trust.
What if there are claimants that the plaintiff does not know about when he or she files the partition action? That’s o.k., as long as the complaint contains certain language which allows the plaintiff to amend before judgment to name these persons at that time. Partition actions often need some ”cleaning up” before a trial when it comes to naming defendants, because certain types of property, especially commercial land, often involve several different owners or competing interests.
Posted by Nick Yonano at 05:23
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Labels: land, partition, property value, real estate, title dispute
Tue, June 9th, 2009
A Partition in Kind– A Court’s Kindness?
It’s not what it sounds like, though some property owners believe a partition in kind is much more “kind” than a partition by sale. A partition in kind is essentially a court-order to divide the property, instead of outright selling it and dividing proceeds. This is favored by courts when possible because, unlike partitions by sale, the property will stay with one or more of its current owners who may want to keep it.
There is a big decision handed down many years ago involving two branches of a farming family in the southern San Joaquin Valley, where 4,700 acres of land (and water rights to a water ditch) were involved, and the two sides of the family just didn’t get along. The land was known as the Ward Ranch.
One side sought the partition by sale. The other side wanted it divided. The appellate court upheld a lower court’s ruling that the property could be divided in-kind, meaning divided among the family members. When possible, this will be the direction of every court. But it has to pass the fairness test, meaning this route would be fair and equitable for all parties.
Posted by Nick Yonano at 03:42
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Labels: land, partition, property value, real estate, title dispute
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
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