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
Fri, May 22nd, 2009
A Gift is Just That, and Not a Resulting Trust in Property
A gives B money to buy some real estate. A tells B the money is because he really wants her to have an investment, in case they ever lose touch. So he wants to buy her some land. A puts it into escrow on her behalf.
Years later, after they do in fact lose touch, A comes back around and tells B she owes him the money plus interest and that he has a resulting trust in the property, because the law in California says that when one pays for the downpayment on property, he/she has a resulting trust in the property to the extent of the payment.
Will A win this argument? No, not if he told her it was a gift, or said words to that effect. Even if he paid the money into escrow. This is often the case in divorce proceedings where there is a dispute to title to property held by the husband and wife. In most cases, the court will look at two things: was there a gift, and if not, was it a straightforward loan? Either way, the transfer of money probably does not create a resulting trust, as I wrote about in my last post.
As a post-script, there is much debate over whether a “loan” should lead to a resulting trust. I’ve seen cases going both ways on this issue.
Posted by Nick Yonano at 04:38
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Labels: constructive trust, land, real estate, title dispute
Fri, March 13th, 2009
What’s so Constructive about this Type of Trust?
Unlike the living trust most people are familar with, there is a legal remedy out there which the courts have to declare to be valid. Known as a Constructive Trust, this is a judicial remedy which holds that person A holds title or possession of property that truly belongs to person B, and person A obtained it wrongfully, so person A holds it in trust for person B. It’s known as a “fraud-rectifying” trust, which means that it’s in place only to make up for the fraud that a person commits to get the property in the first place.
Most of the property involved in an action to impose a constructive trust is real property. But the trust could also apply to personal property, such as stock accounts or checking accounts. I’ll present some examples in my next post.
Posted by Nick Yonano at 08:48
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Labels: constructive trust, fraud, land, real estate, title dispute, trust
Fri, January 30th, 2009
When is a Bona Fide Purchaser Allowed to Enforce Rights in Real Property?
For those who aren’t familiar with the term “bona fide purchaser”, the California Civil Code defines it as a “A purchaser or encumbrancer who pays valuable consideration for his interest in real property in good faith and who records his interest, receives his interest free and clear of all prior unrecorded claims in the property which are unknown to him.”
Now that’s legal talk, of course. Put it simply: if someone buys property and is unaware or was not made aware of a claim or restriction on the property, he/she buys it free from that claim or restriction.
I’ve been involved in many lawsuits, often characterized as an action to quiet title or obtain declaratory relief, where one person buys property that has some restriction he/she is unaware of at the time of purchase. This often arises where there is a restriction that is NOT RECORDED. I capped that because if it’s recorded, there is no issue: the buyer should have known about the restriction. If it is not recorded, the discovery leans toward whether the buyer knew about this anyway, or clearly should have known about this.
In areas where there are large tracts of farmland, such as in the Turlock area, someone may have told his neighbor to go ahead and use the dirt path on the edge of the property for farming, but the neighbor never had this recorded. Whether an easement was created is an issue; whether a subsequent buyer of the grantor’s land knew of this restriction is an issue as well. If the easement was recorded, then the buyer is not a bona fide purchaser (or good faith purchaser) and he/she takes the property with the restriction.
Posted by Nick Yonano at 05:26
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Labels: adverse possession, disclosures, good faith purchaser, real estate, title dispute
Tue, January 6th, 2009
A New Year’s Resolution: Protect Your Property Rights
In addition to the usual resolutions which we all grab on to at this time of year, let me add one more. Not that losing weight or tossing those cigarettes isn’t important, but this one is, too. Are you doing everything you can to protect your property rights? You think you are, but there is more to this than you may think. Throughout the year, I will be adding posts on what a property owner can do to protect his/her rights.
The first is making sure the use of the property is not being adversely possessed. Five years of continuous, open, and hostile use of another person’s property can give one an ownership, or at least an ownership interest, of that property. I see this most often in the misunderstood boundary line setting. Property owner A’s fence is two feet off his/her property and is actually lying on Property Owner B’s property. Been there many years. Most courts would hold that Property Owner A owns that two feet of land now, because he/she adversely possessed the property as required by the law, for five years. Some courts also require A to pay property taxes as well in order to acquire title. I’ll write more about this concept, and similar concepts as well, in upcoming posts.
Posted by Nick Yonano at 08:35
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Labels: adverse possession, land, property value, real estate, title dispute
Thu, October 23rd, 2008
More on a Family Real Property Exchange
Yesterday I wrote of a recent transaction between family members that allowed everyone to go their separate ways (well, sort of) instead of fighting each other in court. I meant to give a nod to the firm on the other side of this set of transactions. The firm is Coleman & Horowitt, LLP and the two attorneys from Coleman & Horowitt which assisted their clients in getting a resolution, are Bonnie Anderson and Bill Coleman. For folks in the Fresno area who are looking for a law firm that does a good job, give ‘em a call.
Posted by Nick Yonano at 07:42
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Labels: land, real estate, title dispute
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