When does the Partition of Real Property Act apply (CCP § 874.313)?
As noted previously, the Partition of Real Property Act applies to real property held in tenancy in common where there is no agreement in a record binding all the co-owners related to partition. (CCP § 874.311.) But does that mean its provisions are mandatory in such situations? Case law and legislative history suggest the answer to that question is “yes.”
For one, the Code states that the property “shall” be partitioned under the Partition of Real Property Act unless all of the cotenants (including the defendants to the action) otherwise agree. (CCP § 874.313.) This mirrors the Uniform Partition of Heirs Property Act, which provides that if the property is heirs property, “the property must be partitioned under this act unless all of the cotenants otherwise agree in a record.”
And there is no question that the UPHPA drafters intended the application of its provisions to be automatic. As the drafters noted, without the application of the act automatically in partition actions, “there would be a disincentive” for cotenants to point it out to the court. (Mitchell, Reforming Property Law to Address Devastating Land Loss (2014) 66 Ala. L. Rev. 1, 45.) After all, they would prefer the property be sold without issue under ordinary partition laws.
This has more of less been confirmed by the courts interpreting the UPHPA. As the Georgia Court of Appeals framed it, “once property is determined to be heirs property, the provisions of the UPHPA are mandatory.” (Matabane v. Whatley (2022) 364 Ga.App. 56, 58, emphasis added.)
Texas courts have adopted a similar view, again noting that if the property to be partitioned is “heirs property” then the property “must be partitioned” under the UPHPA. (Rogers v. Coslett 646 S.W.3d 1, 10.) And in Montana, their Supreme Court noted that either the UPHPA applies, or it does not; if it’s inapplicable to a co-ownership scheme, its provisions do not apply. (In re Estate of Elliot (2022) 2022 MT 91N 1, 25.)
As such, it’s reasonable to conclude that California follows a similar scheme. While our statute lacks the word “must,” it does say the property “shall” be partitioned under the Partition of Real Property Act. (CCP § 874.313.) This suggests that if the property is owned in tenancy in common, and there is no agreement between the parties governing partition, the partition must occur under the Act.
Alternatively, if the property is held in a joint tenancy, the Act would not apply because the Act’s provisions do not reference that co-ownership scheme.
Does the Partition of Real Property Act apply to an ongoing partition lawsuit (CCP § 874.311)?
Because the Partition of Real Property Act is a new law, it has an effective “starting date,” so to speak. The California Legislature has stated that “this act applies to all actions for partition of real property filed on or after January 1, 2023.” (CCP § 874.311.)
As such, for the first-time litigants filing a partition action today or at any point in the future, the Partition of Real Property Act may apply. But what about those litigants who filed their partition actions in 2021 or 2022?
While no California cases address this unique scenario, the Partition of Real Property Act likely does not apply. For instance, the Virginia Supreme Court noted that it would decide a partition appeal under the provisions of the law that existed at the time the case was heard, before their state passed the UPHPA. (Berry v. Fitzhugh (2020) 299 Va. 111, 120, fn. 3.)
What is the Mandatory Appraisal under the Partition of Real Property Act (CCP § 874.316.)?
This is the first significant change to the way partitions are conducted. As noted by the NCCUSL, some states require that any property that may be partitioned be appraised before the court decides whether to partition by sale or physical division. In contrast, for others, such as California, this occurs after the court determines the method of partition and is usually done by a partition referee. (see CCP § 873.060.)
Under Code of Civil Procedure section 874.316, however, the court orders the property to be appraised by a licensed appraiser regardless of whether it is being partitioned physically or via sale. The timing of the appraisal, though, is open to debate.
Notably, both under the UPHPA and California’s Partition of Real Property Act, subsection (g) of the statute provides that the appraisal and subsequent hearing on appraisal (discussed below) must be conducted “before considering the merits of the partition action.” (CCP § 874.316.) This seems to suggest that the court has to determine the property’s value before it even looks at whether the plaintiff is entitled to partition in the first place. And the case law from other states backs this up.
As the Georgia Court of Appeals put it, “the trial court’s act of ordering an appraisal is a preliminary step in the statutory scheme for determining how to partition the property.” (Morton v. Pitts (2020) 357 Ga.App. 513, 514, emphasis added.) And once requested, it is a mandatory step. “Where the procedures are set forth in the Act using the word ‘shall,’ the procedures are mandatory, and the trial court errs in failing to follow them.” (Id.)
Does the Court always order an appraisal under the Partition of Real Property Act (CCP § 874.316)?
No. There are two exceptions to the court order of an appraisal. The first is that if the parties have already agreed to a valuation in writing, the court must adopt that agreed-upon valuation. The second is that if the court determines the cost of an appraisal outweighs its benefit, it can determine the fair market value on its own after an evidentiary hearing. (CCP §§ 874.313, 874.316.)
Other states have interpreted these exceptions to be exclusive. If neither applies, then the court must order an appraisal. For example, in a Texas appellate decision, a court’s denial of a request for an evidentiary hearing on property valuation was held to violate the statute’s plain language. (Rogers v. Coslett (2022) 646 S.W.3d 1, 11.)
Another interesting bit relates to the agreement exception found in the UPHPA and California’s Act. As noted, the court may adopt an alternative valuation method or a value if all the cotenants agree in writing. (CCP § 874.316 (b).) But what happens if one of several co-owner defendants defaults, and never bothers to appear in the lawsuit? Is an agreement by the appearing parties valid?
Georgia’s stance is that it is not. An agreement for the purposes of the UPHPA is invalid “unless all of the cotenants, not just all of the non-defaulting cotenants, otherwise agreed.” (Faison v. Faison (2018) 344 Ga.App. 600, 603.)
In sum, once a court determines that the property falls into the scope of the Act, it must order an appraisal on request. That appraisal must be ordered unless (1) the court mandates an evidentiary hearing minus a formal appraisal, or (2) all co-owners (not just those appearing) have already agreed to a valuation price for the property.
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How the Lawyers at the Underwood Law Firm Can Help
While the courts and lawyers attempt to figure out the operation of the Partition of Real Property Act, litigants may feel stressed at the prospect of undertaking a partition governed by a relatively new law. These situations can be stressful, and difficult, especially when the way out is not entirely clear. Fortunately, the lawyers at the Underwood Law Firm specialize in partition actions and solving difficult co-ownership problems through civil litigation, helping good people end bad real estate partnerships. If you have found yourself in one of these situations, then please do not hesitate to contact the Underwood Law Firm.