Real property partitions help co-owners and co-tenants divide real estate that they purchased together. Partition actions can be agreed upon by the parties, but if there is no agreement, a court will oversee the partition. Under California law, a court will first determine each party’s interest in the property and then determine the way the property will be partitioned. (Code Civ. Proc., § 872.720(a).) California Civil Code of Procedure section § 872.720(a) provides:
If the court finds that the plaintiff is entitled to partition, it shall make an interlocutory judgment that determines the interests of the parties in the property and orders the partition of the property and, unless it is to be later determined, the manner of partition. (Code Civ. Proc., § 872.720.)
Property partitions can be completed by dividing the physical property, by selling the property and dividing the amount of the sale among the interested parties, or by appraisal with all parties’ consent. In partitioning property through a sale without an agreement, courts may select a referee to assist in the sale. While courts presume that physical division of the properties is the fair option, a party wanting to sell the property can prove that it would be fairer to sell it than it would be to divide it. (Butte Creek Island Ranch v. Crim (1982) 136 Cal.App.3d 360, 366.)
Sale at Public Auction
The alternative to a private sale is a “public auction.” A court will order a sale at a private auction only if it is supposed to be “more beneficial” to the parties. (CCP § 873.520.) A court will determine whether a public auction or private sale is more advantageous based on a referee’s report. (CCP § 873.520.)
For practical purposes, a sale at a public auction is exceedingly rare because of all the other things involved. A sale at a public auction to the highest bidder must be held in the County in which the action is pending or other such place as may be specified by the court. (CCP § 873.670.) The referee, with court approval, may employ an auctioneer authorized to act as such in the locality to conduct a public auction and to secure purchasers by such method of any property to be sold at public auction. (CCP § 873.140.) Unless ordered by the court, personal property must be present at the sale. (CCP § 873.670.)
In a public auction, the bid or offers must be in writing and left at the place designated in the notice at any time after the first publication or, if none, the posting of the notice. (CCP § 873.680(b).) In the case of a private sale, the place of sale will normally be the place of business of the referee. (CCP § 873.650, Law. Rev. Comm’n Comm.)
Requirements of a Private Sale
When the court in a partition action determines that the property is to be sold rather than divided, the sale is made by a referee appointed by and accountable to the court. (CCP § 873.510.) The sale is a judicial sale. (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.)
In the event of a private sale, a notice must be provided in the same way that similar property would be sold, and the notice must include where bids or offers in writing can be submitted in addition to a date the sale will be completed, as well as a description of the property and a statement of the principal terms of sale. (Code Civ. Proc., §§ 873.650, 873.680.) This allows members of the public to participate in the sale. (Cummings v. Dessel (2017) 13 Cal.App.5th 589, 600-601.)
The reasoning behind public participation is to hopefully increase the number of bids and their amounts. Along those same lines, a private sale is not restricted to only the co-owners of the property because that could have the opposite effect on the bids. The private sale cannot occur before the date on the notice, but it must happen within a year of the date on the notice.
For example, say that two people have an interest in a ranch and they want to partition it, but they do not have an agreement. The ranch has different types of land in different areas and there is a ravine separating a portion of the land from road access. If the land were to be physically divided, the party that gets the portion of the land without access to the road might argue they are getting land of lesser value because there is no way to access it. The law requires the party to show that the land cannot be divided equally, and Courts rely on a test to determine if the party has successfully proven that. The test assesses whether the portion of land of lesser value distributed to the party would be worth more if the land was sold as a whole. If it would be worth more sold as a whole, that party will have successfully proven the property should be partitioned by sale rather than by physical division.
Partition by private sale can be a useful method of dividing co-owned real property because it can be simple and result in higher bids on the property. If all interested parties can agree on private sale as the method, then that will be the course of action. Otherwise, a court will determine the method of sale with the help of a referee by reviewing what is most beneficial to the parties.
How the Lawyers at Underwood Law Firm Can Help
Securing a judgment of partition is only the first step in the process of selling Property through the court system. Once completed, parties will be expected to cooperate with realtors and referees, while also making sure they comply with the applicable notice requirements set out in the Code of Civil Procedure.
For the inexperienced litigant, the next steps might seem impossible to determine. Fortunately, the lawyers at Underwood Law Firm specialize in partition actions and solving the difficult problems that can accompany them. If you have found yourself in one of these situations, then please do not hesitate to contact us today.