The City of Glendale was founded in 1887 and was originally part of a bigger parcel of land, Rancho San Rafael, which was divided in a court decision known as the "Great Partition." Today, Glendale's housing market is somewhat competitive and residents of Glendale who own real estate may face disputes with co-owners. Generally, a Glendale Partition Lawyer can usually find partition action to be the best remedy for disputing co-owners in four broad categories:
A partition action is a lawsuit brought by a property owner seeking the court to force the sale of a jointly owned piece of real property. Typically, partition actions occur when co-owners of real estate have disputes about its ownership and use, and one of them seeks to end their ownership interest. That is, a partition action has no other purpose than to sever the unity of possession between cotenants in a piece of real property. (Rancho Santa Margarita v. Vail (1938) 11 Cal.2d 501, 539.) Currently, partition actions are governed by the provisions set forth in the Code of Civil Procedure section 872.010. These statutes set out a general process by which a property may be partitioned.
Historically, the term "partition" comes from the basic word to break into "parts" as in physically dividing real estate in half. For example, if two siblings inherited ten acres of farmland, the property could historically be divided into five acres a piece for each of them. As most people now live in single-family homes, which cannot simply be "split in half," courts will instead order that the property be sold and the proceeds, or equity, be "split in half." The best Glendale Partition Lawyer will be able to share information on this process with you.
What Are the Steps in a Partition Action?Generally, the first step in the partition lawsuit process is not a lawsuit, but an earnest attempt to resolve the matter informally, such as through a partition agreement. Only when it is clear that litigation is the only option, is it clear that a partition lawsuit is appropriate.
When it is clear that a partition lawsuit is necessary, then the process begins with the filing of a complaint in the county where the property is located. There are several technical requirements for the partition complaint, and many important steps that must be taken during the lawsuit to ensure that the process is managed effectively.
In a partition lawsuit, there are generally four different steps. First, the court determines each party's ownership interests. Second, the court will decide on the manner of sale. Third, the court will order the property be sold. Fourth, the proceeds from the sale will be divided between the parties based on their relative contributions to the property.
While some may believe that inherited property cannot be partitioned, this is incorrect. Instead, when the property is owned as the result of an inheritance, there may be an additional step for an appraisal, and a right of first refusal, as provided by the Uniform Partition of Heirs Act. Under this act, where a co-tenant requests partition by sale, the law gives the non-partition owner the option to buy all of the interests of the co-tenants who requested the sale. A top Glendale Partition lawyer will be familiar with the process.
Can You Mediate a Partition Action?Under the law, a property owner can make a claim for contribution for anything that they have expended for the common benefit of all the parties as it relates to their jointly-owned property. Code of Civil Procedure section 874.410 states that “the court may, in all cases, order allowance, accounting, contribution, or other compensatory adjustment among the parties according to the principles of equity.” For example, the credits can include expenditure in excess of the co-tenants fractional share for necessary repairs and improvements that enhance the value of the property. (Wallace v. Daley (1990) 220 Cal.App.3d 1028, 1035-1036.) Similarly, payments for interest, taxes, and insurance made by any co-tenant could be the subject of a reimbursement claim. (Hunter v. Schultz (1966) 240 Cal.App.2d 24.) An experienced Glendale Partition Attorney will be intimately familiar with these matters.
What Are Claims for “Contribution”?Before the sales proceeds are distributed among the parties, a court-ordered accounting will determine the charges and credits upon each co-owner’s interest. These credits are taken out of the net proceeds before the balance is divided equally. (Southern Adjustment Bureau, Inc. v. Nelson (1964) 230 Cal.App.2d 539 (“Nelson”).)
“When a cotenant makes advances from his own pocket to preserve the common estate, his investment in the property increases by the entire amount advanced. Upon sale of the estate, he is entitled to his reimbursement before the balance is equally divided.” (Nelson , 230 Cal.App.2d, at p. 541, citing William v. Koyer (1914) 168 Cal.369.)
As such, a party to a partition action must produce and gather their evidence and make sure that it is presented to the court so they can receive full credit for the value that they have added to the property. While a party may have a right to these credits under the law, ultimately, they will not be counted unless they can be presented in the proper form. An experienced Glendale Partition Attorney will be intimately familiar with these matters.
A Partition Case Study: Stull v. Fox (2012)How may the dissolution and winding up of a business partnership affect how a business property is partitioned? A court’s findings regarding the state of the partnership, interests in partnership assets, and terms of the partnership agreement may play important roles in the court’s ultimate disposition as to whether partition by sale or partition in kind is warranted. The following paragraphs discuss how the United States District Court for the Central District of California considered these factors in Stull v. Fox (2012) 2012 WL 1229768.
In Stull , Mr. Tom Stull (“Stull” or “Petitioner”) sued Mr. Michael Fox (“Fox”) and Kevin Beer (“Beer”) (collectively, the “Respondents”) when a dispute arose in connection with the management of their business partnership (the “Vida Nueva Partnership”). After an initial complaint was filed in 2011 with the Santa Barbara County Superior Court, the dispute between Stull, Fox, and Beer eventually made its way to the United States District Court for the Central District of California.
During a hearing on March 19, 2012, Respondent Fox made a motion before the U.S. District Court for an order partitioning the assets of the Vida Nueva Partnership. Stull had previously sought judicial supervision of the dissolution and winding up of the Vida Nueva Partnership, which was the subject of the prior underlying action. The court in that action had determined that Stull, Fox, and Beer were partners in Vida Nueva. The court had also made various findings about the existence and terms of a partnership agreement with respect to real property located in Panama (the “Property”), as well as various other partnership assets.
Stull sought the U.S. District Court's approval of the sale of the Property, the main asset of the Vida Nueva Partnership, through two requests. Stull’s first request valued the Vida Nueva Property development at $6 million. His second request valued the Property 25% higher, at $7.5 million. The Court denied the first request, and the second was later rendered moot by the Court’s disposition on partition, which is discussed below.
The U.S. District Court noted that the court in the underlying action had previously held that it was clearly no longer reasonably practicable for Stull, Fox, and Beer to carry on the Vida Nueva Partnership. Accordingly, that court had ordered that the partnership be dissolved and that its business be wound up. The District Court also noted that Stull’s ongoing efforts to press for a quick sale of the Property—at prices giving him the lion's share of the sales proceeds and leaving the other partners with little to nothing—corroborated the prior court’s conclusion that the business should be dissolved.
Since Stull, Fox, and Beer had expressed vastly different views of the value of the Property and of the best time and method for selling the Property, the District Court held that the most equitable solution would be to partition the Vida Nueva Partnership’s assets such that each individual partner would have sole title to a portion of the Property representing his proportionate share of partnership assets. Beer and Fox's individual parcels would remain subject to the obligation to pay to Stull their respective share of the amount owed to Stull under the partnership agreement. The Court concluded that this solution would permit the partners to go their own ways while minimizing the need for further dealings.
Stull opposed Fox’s motion for an order partitioning the assets of the Vida Nueva Partnership. Stull argued that the prior court’s findings directing the dissolution and winding-up of the Vida Nueva Partnership constrained the District Court’s power to order partition. Stull also argued that, under Section 16402 of the California Corporations Code, which states that “A partner has no right to receive, and may not be required to accept, a distribution in kind,” the remedy of partition is not ever available in connection with the dissolution of a partnership.
The District Court rejected these arguments. The Court reasoned that Section 16402 is part of Article 4 of the Uniform Partnership Act, which governs “relations of partners to each other and to the partnership,” while the provisions governing dissolution and winding-up of partnerships are set forth in Article 8. Although Article 8 contemplates cash distributions, it does not expressly state that partition is not an available remedy in a dissolution proceeding or that cash is the only permissible medium for allocating partnership property among the partners in connection with the winding-up of a partnership.
Moreover, the Court held that California Code of Civil Procedure section 872.730 expressly provides that partition is an available remedy in any proceeding related to the dissolution of a partnership. Under this statute, partners such as Fox—who have an interest in partnership assets concurrent with the interests of the other partners—are entitled to partition as a matter of right, subject only to the constraint that unsecured creditors not be prejudiced. (C.C.P. § 872.710(b) (“Except as provided in Section 872.730, partition as to concurrent interests in the property shall be as of right unless barred by a valid waiver”).)
Stull made another argument against partition on the false premise that he had a more direct interest in the Property than did Fox and Beer based on his control of partnership assets. Stull claimed that Fox had been commissioned as a mere salesman, which was an argument that had been rejected by the prior court when it found that Stull, Fox, and Beer were all full partners. Even though a company controlled by Stull held title to Property, the Court held that Stull controlled the property in his capacity as a partner and the Property was a partnership asset in which each partner had a direct interest.
Finding that Stull, Fox, and Beer were equally situated, the District Court held that there was no reason that the Property, almost all of which was undeveloped, could not be divided in kind, such that each of the three partners would hold sole title to his own individual parcel. Furthermore, the Court held that no partner would be prejudiced or treated unfairly by such partition under the details of the partnership agreement.
Thus, the Court held that partition in kind was the most equitable remedy and granted Fox’s motion.
How the Underwood Law Firm Can HelpAs we’ve seen, the dissolution and winding up of a business partnership can certainly affect how business assets are partitioned. In some cases, the court’s findings concerning the state of the partnership, interests in partnership assets, and terms of the partnership agreement may result in a partition by kind, rather than by sale.
As there are many different ways to waive the right of partition, and you are considering it as an option, then you may benefit from good legal advice on the topic. If you find yourself contemplating a partition action, or faced with defending one, then please contact Underwood Law Firm, P.C. for an initial consultation.
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