How does a court make an accounting when a property is partitioned by division?

A lawyer on his desk signing a document.When there is a court-ordered partition by division, there are several steps that both the court and parties take to ensure that the property is physically divided both equally and equitably. Read on to find out the different avenues the court takes when deciding a partition by division lawsuit. 

How does the Court Account for partition by Division?

First, the court operates on the assumed guideline that all parties should have the property divided in the most equal and equitable ways possible. The court in the Canepari v. Pascale court case found that there is a rebuttable presumption that the partitioned property should be equally divided. This means that if each co-owner or tenant holds a 50 percent interest in the property, then the property in question is divided as physically possible to a 50/50 divide. 

The judge will begin with the presumption that the property is to be divided equally according to shares or interest in the property. However, there are other situations in which there needs to be more accounting in creating the most equitable and equal divide. This could include home improvements, lot improvements such as getting construction work done to make your plot of land more habitable, or other projects that could potentially affect the value of the property. These types of improvements that could possibly affect the value of the property and therefore should be considered in a partition court action are called “capital improvements.’

There may be certain costs that are not considered to be available for division, such as property taxes or other fees associated with maintaining the property. All of the costs and the potential division are all subject to the court and the judge’s specific discretion in the division. The court’s division of these costs is known in the legal world as “owelty.” 

What is owelty?

“Owelty” is a sum of money paid by one former joint tenant to another after a partition results in the unequal division of property in order to equalize the disproportionate division of property. A court decrees an “owelty” in order to compensate a prejudiced party for the inequality of the partition. (see Gonzalez v. Gonzalez (1917) 174 Cal. 588.) 

Code of Civil Procedure section 873.250 specifically provides that where the division cannot be made completely equally among the parties according to their interests without prejudice to the rights of some, then compensation may be required to be made by one party to another to correct this inequality. That referee can direct that the compensation be imposed as a lien on the debtor party’s interest to assure payment of the compensation. (see CCP § 873.250.)

Indeed, Code of Civil Procedure section 873.280 provides that the referee’s report must include any recommendations as to owelty in a partition by division. Notably, the provision for owelty is separate from compensatory adjustments made under the ordinary principles of equity for accountings, allowances, and the like. 

For example, in Jamison v. Jamison (2008) 164 Cal.App.4th 714, the trial court valued land at $4,000 per acre and ordered that payment be made on that basis. 

What is the court’s role in a partition?

Similar to other legal disputes, parties are encouraged to settle a partition action prior to trial. 

However, if the partition action is not settled before trial, then a trial will take place that will seek to solve any issues within the partition action. These issues could include how to calculate offsets owed to parties, intentional or unintentional damage assessment, landlord or tenant issues, how to measure the value of the property in question and the methods used to determine the value, and how to pay out and equally divide the property’s proceeds amongst all of the parties, and specific court orders. 

Court orders could include assessments of the property’s value, determining whether it is an improved or a vacant lot, and deciding the property’s main use in family partition issues. 

Courts can also order other types of relief in partition actions, depending on whether it is a partition by division or a partition by sale. 

What is Partition by Division?

Partition by division is when the court orders that the property in question be divided equally and equitably by drawing physical lines of the property and therefore creating separate real estate properties. 

This method is generally reserved for properties with enough physical space for the property to be divided both equally and equitably. 

Partition by division is reserved for if all co-owners or all people with interest in the property are interested in continuing to own their property but do not with to co-own it with anyone else. Thus, the court will physically divide or order a partition by division action. 

On occasion, this means that there will be a structure, such as a house built or a business, built on some parts of the land in question and not others. This can be decided in court based on the parties’ interests. 

Sometimes, depending on the county and the court in which you are litigating your partition claim, a partition by the division may be called a “partition in kind.” Regardless, if the property division lines are being litigated or settled outside of court, physical division by a partition action means that the property in question will be divided, and the land divisions will be made as equitable as possible. 

How can the attorneys at Underwood Law Firm assist you?

Whether you are faced with a partition action you did not wish for, or you wish to assert a partition action against your co-owners, it is a good idea to have a knowledgeable and experienced attorney by your side, like the ones at Underwood Law Firm. There are a lot of different legal deadlines and submission guidelines for partition actions in real estate litigation actions, and it may behoove you to consult with an attorney to see for yourself how they could assist you in maintaining compliance with all of the guidelines and regulations of partition actions. 

 

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