Can you partition a life estate?

Underwood-Blog-Images-1-1-300x300Yes. When co-owners of property decide they want to go their separate ways but cannot come to an agreement on a buyout or reimbursements, they can institute a partition action and have the court system solve the problem for them. 

The presence of a life estate, however, substantially complicates this process. Additional evidentiary showings are required, and a partition might not even be available if the life estate owner fights the lawsuit. Thankfully, the Underwood Law Firm is more than familiar with partitions of all types and is here to assist property owners throughout the process. 

What is a life estate? 

A life estate is a unique type of present possessory interest in real property that is becoming increasingly rare in the modern real estate landscape. In its simplest form, the life estate is an ownership interest in property that lasts only for the lifetime of an individual. While that individual is alive, another or several other persons hold a “future” interest in the property that becomes possessory once the life tenant passes away. 

On one hand, the owner of a life estate is in many ways like the ordinary owner of real estate. The person who has the life estate holds a present interest in the property, which is considered an interest in fee simple for the purpose of the property’s usage by the life tenant. (Civ. Code § 818; Durante v. County of Santa Clara (2018) 29 Cal.App.5th 839, 843.) This means the life estate holder has all the property rights that any other property owner would.

Yet, a life estate is very different from regular property ownership in that the estate’s interest is “present.” When the life estate owner dies, the life estate terminates automatically. (Clark v. Bates (1951) 104 Cal.App.2d 597, 599.) The future interest, usually called a “remainder,” commences when the precedent estate (the life estate) expires. (Civ. Code § 769.) 

For example, suppose that “Jack” has two children: “Shawn” and “Julie.” Shawn and Julie are quite financially successful and own multiple properties. They can see that their father is growing older and so decide to grant him a life estate in one of their jointly-owned houses. For as long as Jack lives, the property is his to use of his own accord. Once he passes away, his “present” interest in the house terminates and reverts back to Shawn and Julie automatically. 

How are life estates created and terminated? 

In California, life estates are created through written instruments like deeds or grants. There are few formalities necessary for their creation. The instrument need not even include the term “life estate” for one to be created. The only true requirement is that the arrangement is memorialized in writing. (CCP § 1971.) 

Because of this writing requirement, life estates are governed by the principles of contract law. And like any other contract, the terms can specify the rights, duties, and obligations of the parties, including the criteria for early termination of the estate. 

For instance, when life estates are granted to heirs, they sometimes carry remarriage provisions specifying that the marriage or remarriage of the life tenant terminates the estate automatically. 

Life estates can also be terminated by operation of law when all the interest holders collectively agree to convey the property to a third party. (Holman v. Holam (1938) 25 Cal.App.2d 164, 169.) But again, this requires the life tenant and future interest holders to all agree to the transaction. 

Does a life estate bar a partition? 

Not automatically. Under the old partition statutes from the mid-90s, the categories of individuals entitled to bring a partition were much more limited. Back then, those persons who held only future interests in the property could not sue for partition while the life tenant remained living on the property. (Akagi v. Ishioka (1975) 47 Cal.App.3d 426, 434.) 

The rationale for such a rule was that life estate holders should be entitled to greater consideration. The purpose of the life estate would be defeated if any remainderman or other future interest holder could simply bring a partition suit. 

Such restrictions no longer exist. But California law still carves out provisions to keep the spirit of the old rule alive. When a property is owned in “successive estates,” partition is available. (CCP § 872.210.) But partition of such an estate is permitted only if it is in the best interest of all the parties. (CCP § 872.710 (c).) 

In making the “best interest” determination, a court will use its equitable powers to come to the fairest result. For instance, one of the factors the court will consider is whether the present possessory interest has become unduly burdensome because of taxes or other charges. There are other factors outlined in the code, but in general, section 872.710 is designed to give the court fairly broad discretion in the case of successive estates. 

Can a life estate function as a waiver of the right to partition? 

Sometimes. While a life estate is not an automatic bar to the right of partition, it can nonetheless stop such a lawsuit in its tracks by operating as a waiver. 

A waiver is one of the only recognized defenses to a partition suit. It is a contract, express or implied, where the parties to the contract give up the chance to partition the property in question. Even though partition is characterized as a “right,” it is not meant to interfere with valid contracts between co-owners. (American Medical International, Inc. v. Feller (1976) 59 Cal.App.3d 1008, 1014.) 

Waivers are a complicated topic and require a strong showing in court by the party attempting to prove their existence. But in essence, if a partition frustrates the purpose for which property was acquired, a waiver may exist. (Pine v. Tiedt (1965) 232 Cal.App.2d 733.)

In the context of life estates, the argument is usually that partitioning the property would be contrary to the expectations of the life tenant. For example, in Nazzisi v. Nazzisi (1962) 203 Cal.App.2d 121, the appellate court held a waiver of partition existed because the implied agreement the defendant was to live on the property for the rest of his life. Thus, partition defeated the “purpose” of the life estate. As a result, it is necessary to have a knowledgeable partition attorney investigate all issues related to any life estate to provide the best legal advice. 

How can the Attorneys at Underwood Law Assist You? 

Partitions are fairly common in California, particularly among unmarried couples and business partners. But the existence of a life estate or other successive estate can cause serious headaches for first-time litigants just trying to get their equity out of a property. In a similar vein, facing a partition when you had no expectation of selling your property can be a nightmarish experience. 

As each case is unique, property owners would be well-served to seek experienced counsel familiar with the ins and outs of partitions and estates. At Underwood Law, our knowledgeable attorneys are here to help. If you are concerned about facing a partition action, if you’re interested in seeking one yourself, or if you just have questions, please do not hesitate to contact our office.

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