How does a partition by private sale work?

A lawyer writing on a paperwork on his desk in front of his client.Partition by a private sale is a method of selling jointly owned property, either by joint tenants or tenants in common,  under the court’s supervision via a court order or a court-ordered referee. 

What is a partition lawsuit?

A partition action or a partition lawsuit is when one co-owner, or when one person with an interest in the property wants to sell the property, but the other co-owners or others with an interest in the property do not want to sell their ownership rights. 

A partition lawsuit is brought by one co-owner to force the sale of the property. This is one way for a co-owner to sell their interests in the property in question and terminate their ownership status. 

There are several situations where there could be potentially several parties with an interest in one property. These could be called “joint tenancies” or “tenancies in common.” 

Partitions can be either voluntary or compulsory by judicial means, such as ordered by a judge. Judges can order to physically divide or sell the property, depending on the specific property and its characteristics in question.

What are the different types of partition actions available?

There are two main types of partitions actions available in a partition lawsuit. The first is a partition by division, where the property is physically divided. This method is generally reserved for a property with the physical space for the property to be divided so that people would still want to use the land for regular enjoyment at the conclusion of the partition. 

The second method of partition action available is called a “partition by sale.” This partition action is when the house or property in question is sold, and proceeds are equally and equitably split and divided amongst all of those who have an ownership interest in the property in question. The partition by sale must be beneficial to all of the parties with an interest in the property. 

What is a partition by sale?

A partition by sale is when one co-owner of a property forces the sale of the entire land or piece of the property despite the lack of desire from the other co-owners or others with an interest in the property. 

Unless in very specific situations with something called a “waiver,” there is no defense to partition actions by other co-owners. 

The court will first determine whether or not it would be more “just” to physically divide the property in question or to sell the property and divide the sale proceeds of the property, minus any offsets. 

The physical sale of the property can take shape in many different forms. However, the most usual ways to sell the property are in public auctions, private sales, or a listed property by a referee with the assistance of a real estate agency. The method of sale is decided upon by the court, but parties are welcome to input their opinion on the method of sale. 

The court normally appoints what is called a “partition referee.” This referee will have the authority to sell the property via the method approved by the court with the goal of selecting a sale process that is the most beneficial to all of the parties with an interest in the property in question. 

What are the steps in a partition by sale action?

First, a partition action is filed. A partition action can be filed if one co-owner of real property or a piece of real estate wishes to sell the property or piece of real estate in question, but the other co-owners or co-tenants do not wish to sell their ownership rights. 

Second, the court may appoint a court referee to oversee the sale of the property in question. The sales procedure includes that all parties agree to the terms and conditions of the sale in writing. If the parties can not agree, as partition actions are usually very contested issues, then the referee that the court-appointed may recommend terms and conditions to the court. Then the court will hold a hearing to decide whether or not to accept those terms and conditions. 

Third, in some states and counties, the property’s value will be appraised via a third-party or another property appraisal with no ties to any of the parties. While this is not required in all states, it is recommended to make sure that all parties are on the same metaphorical page as to the potential sale proceeds of the property in question. 

Fourth, the referee will conduct the sale in the method most agreeable to all of the party’s goals. This can be via a public auction or a private sale. Regardless of the specific method of a partition by sale, the court will determine if the sale was “fair.” If it is decided that the property’s sale proceeds had a lack of proper notice, the sale amount is not within reasonable the value of the property, or if the proceeds were unfair- the court would rule that the property will be up for sale again. 

Lastly, the court will order that the proceeds of the sale, minus any court litigated or approved offsets or costs, will be distributed equitably amongst all of the co-owners or people with an interest in the property. 

Who is responsible for conducting the private sale?

When the court in a partition action determines that the property is to be sold rather than divided, then the sale is made by a referee appointed by and accountable to the court. The sale is a judicial sale. (see Potrero Nuevo Land Co. v. All Persons Claiming Interest in the Real Property Described (1916) 29 Cal.App. 743.) 

The Code of Civil Procedure recognizes the accepted bid as a sale and the successful bidder as a purchaser, although the sale is not fully completed so as to entitle the purchaser to a deed until confirmation. (Dunn v. Dunn (1902) 137 Cal. 51.) 

The referee must also give notice in regard to the sale to all co-owners of the property unless waived during the court proceedings under the partition lawsuit. 

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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