What is a Partition by Appraisal? 

Underwood-Blog-Images-1-2-300x300A partition by appraisal is an alternative method of partition that occurs when the parties to a partition action agree to have the subject property partitioned by appraisal. With the Partition of Real Property Act taking effect in 2023, almost every partition action moving forward will involve a Partition by Appraisal. As such, the rules for a partition by appraisal will be important to know for everyone involved in such an action.

Once a partition by appraisal commences, the parties must then go through the appraisal process with an independent appraiser. An independent appraiser appraises the subject property, and the judgment of the appraiser determines the value that should be paid to buy out the interest of the selling co-owner. At the Underwood Law Firm, our attorneys are more than familiar with partition actions and the requirements needed to pursue a partition by appraisal. 

What is a Partition Action?

A partition action is an action brought by a co-owner of a piece of real property against another co-owner, seeking to divide the property according to the respective interests of the co-owners. When an appraisal partitions a property, one co-owner agrees to sell their interest in the property to the other co-owner, under court supervision and according to the appraisal of a neutral third-party appraiser. When the non-partition co-owner fails to purchase that interest, however, then the partition action proceeds by sale with an ultimate resulting division of the proceeds from the sale. Alternatively, a property can also be partitioned physically into separate parcels in accordance with the respective interests. 

Partition By Appraisal Requires an Agreement 

When the interests of all parties are undisputed or have been adjudicated, the parties may agree upon a partition by appraisal. (CCP § 873.910.) Therefore, in order to have a partition by an appraisal, there must be an agreement between all the co-owners of the subject property. In turn, the court cannot force a partition by appraisal.

For example, “Jack,” “Kate,” and “Amber” are three best friends that jointly purchased a single-family home together in Riverside. After a few years of living together, Jack and Kate got into a huge fight ending their friendship. Jack and Kate both moved out of the house, but Amber still lives there. Now, Kate is filing a partition action to partition the house. After several months of fighting, Jack approached Kate and asked her if she would agree to buy out his interest in the home through a partition by appraisal. Kate agreed, and the two drafted an agreement for a partition by appraisal; however, neither Kate nor Jack ever consulted Amber. Accordingly, Jack and Kate would not be able to get a partition by appraisal because Amber never agreed to it. Although her interest in the home would be unaffected if Kate bought Jack’s interest, Amber’s approval of a partition by appraisal is required because she owns an interest in the home.

Further, there are also certain requirements that need to be fulfilled in order for the agreement for partition by the appraisal to be valid. Under Code of Civil Procedure section 873.920, an agreement for partition by appraisal must be in writing filed with the clerk of the court and must include: (1) a description of the property, (2) the names of the parties and their interests, (3) the names of the parties who are willing to acquire the interests, (4) the name or names of a person or persons whose appointment as referee or referees the parties consent, (5) the date or dates of which the interests to be acquired is to be appraised, and (6) other terms mutually agreed upon. (CCP § 873.920.)

Once an agreement has been drafted according to section 873.920, the parties must get the court’s approval of the agreement. Any party to the agreement may apply for court approval. (CCP § 873.930(a).) The court must approve the partition by appraisal agreement if the court finds that the agreement complies with section 873.920 and that the terms and conditions of the agreement are equitable. (CCP § 873.930(b).) 

The Appraisal 

Once the agreement for partition by appraisal is rendered valid by the court, a partition referee must be appointed by the court, or if provided in the agreement, three referees to appraise the subject property. (CCP §873.940.) The referee is responsible for drafting a report of the valuations of the parties respective interests, and other findings to the court in writing and filing said report with the court clerk. (CCP § 873.940.)

Once the referee has filed their report, the court must hold a hearing to confirm the report. The court must confirm the referee’s report and order the interests transferred to the acquiring party in proportion to their respective interest or in proportion set out in the agreement if the court finds (1) proceedings have been regularly conducted, (2) transfer of title to the interests may be regularly made, and (3) no facts appear which would make the transfer inequitable. (CCP §873.960.)

Once these requirements are satisfied, the court’s order confirms the transfer of interests is conditioned on the following factors: (1) payment of the amounts fixed as the purchase price and any other amounts required by the partition by appraisal agreement, (2) the giving of any required security, and (3) payment by the parties of the expenses of the partition by appraisal procedure and the general costs of the partition. (CCP § 873.960.) 

How Can the Attorneys at Underwood Law Assist You? 

The requirements to get a partition by appraisal can prove to be a difficult task once in court. A partition by appraisal requires that all interested parties consent to the partition by appraisal procedure. To establish a right to partition by an appraisal, parties must agree in writing to the partition by appraisal procedure, and this agreement must be approved by the court. Only then may the parties to a partition action appoint a referee to conduct a partition by appraisal. It follows, then, that applying for a partition by appraisal can be a complex process.

As each case is unique, property owners would be well-served to seek experienced counsel familiar with the ins and outs of a partition by appraisal and the law surrounding it. At Underwood Law, our knowledgeable attorneys are here to help. If you are attempting to assert a partition action, are worried about your ability to get a partition by an appraisal, or if you just have questions, please do not hesitate to contact our office.

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