Who can buy property at a partition sale?

Underwood-Blog-Images-3-300x300Even when a party finally secures a judgment of partition, the property itself must still be sold (or partitioned in another way). This raises a brand-new set of issues for litigants as they attempt to figure out the terms of sale, when the property should be sold, and, most importantly, the asking price.

Usually, anyone can buy the property for sale, but shrewd litigants can impose the right terms to ensure that the pool of potential bidders is sufficiently narrowed to meet their goals. At Underwood Law Firm, our attorneys are more than familiar with the practice and procedure of partition sales and are here to assist you in achieving your litigation objectives.

What is a partition sale?

A partition sale is one of three conclusions to a partition lawsuit. Assuming that the case is not dismissed outright, a partition suit ends with a partition by sale, a partition by division, or a negotiated resolution.  

Each of these remedies satisfies one particular class of situations where they would be most applicable. Physical divisions are utilized when the land itself is large and (usually) remote in nature. When the court employs physical division (also called partition in-kind), it literally splits what was formally one piece of land into two or more distinct parcels for each party to occupy in the future.

Partitions by appraisal can only be implemented on the agreement of all parties to the lawsuit. That said, they are used in those instances where one party wants to stay on the property, and the other co-owner(s) is fine with merely selling their interest. This allows co-owners to terminate their differences while permitting one co-owner to retain the property without the expenses associated with a sale. (Cummings v. Dessel (2017) 13 Cal.App.5th 589, 598.)

Even though these other options are available, the vast majority of partitions end in the sales of the property. These are exactly what they sound like. The property is sold, typically by a partition referee appointed by the court. The proceeds from the sale are then distributed to the parties, subject to various accounting procedures that themselves eat up much of the court’s time.

What are the terms of a partition sale?

As stated, partitions by sale are usually completed by partition referees. These referees are either appointed by the court or are agreed upon by the parties. These referees also typically set the terms of the sale itself, with input from the parties. (CCP § 873.510.)

For instance, whether the sale is public or private is a matter left up to the referee. (CCP § 873.520.) The referee can also decide whether the sale will involve credit bids (CCP § 873.630), whether the property will use MLS (multiple listing service), and a host of other decisions.

By setting the terms, the referee (or the parties) is essentially determining who can actually buy the property. Normally, anyone can purchase a property at a partition sale. But by outlining mandatory terms, such as that the sale must be for cash, the referee is narrowing down those eligible to be involved in the potential purchase. 

What is the difference between a private sale and a public auction?

One of the most important determinations for a partition referee is whether the property will be sold at a public auction or through a private sale. While often overlooked, this determination is quite important because it affects the “bidding procedure” itself. (Cummings, 13 Cal.App.5th at 601.)

With private sales, the referee will usually employ the MLS to bring in potential bidders. They may also contact buyer’s agents to bring in more interested parties. But crucially, whatever bids are submitted for the property are reviewed in private by the referee and parties. (CCP § 873.680.) This allows for better analysis and review of each potential bidder by the referee.

This is not to say that public auctions lack merit. Sometimes, parties would simply prefer that the property be sold for whatever they can get in a quick and efficient manner. The end price of the purchase does not matter so much as a “minimum” purchase price does. Public auctions of the property allow the parties to achieve this goal with relative ease and without the expensive marketing expenditures that come with drawn-out private sales.

Public sales are like any other auction. The public at large is informed of the sale through a “notice of sale” that includes a description of the property, the time and place for the auction, and a statement of those mandatory principal terms of the sale. (CCP § 873.650.) At the auction, potential buyers bid with each other until only one offer remains.

Who cannot buy property at a partition sale?

Essentially anyone from the public, including one of the parties themselves, can purchase property at a partition sale. The only exceptions are for three distinct classes of persons: (1) the partition referee appointed by the court; (2) one of the party’s attorneys; and (3) a party’s guardian or conservator unless they are doing so on behalf of the party. (CCP § 873.690.)

These restrictions are in place for conflict-of-interest reasons. A referee is intimately connected with setting the sales procedures. If they were able to buy the property, then they would be incentivized to set a price point or terms that would not be ultimately beneficial to the parties. The same things can be said of attorneys and legal guardians. The nature of their relationships with their clients would simply open up too many avenues for bias if they were allowed to buy their client’s property.

How can the Attorneys at Underwood Law Assist You?

Getting a judgment of partition is often only the first step in partition litigation. Perhaps unsurprisingly, getting the property sold can take even longer than litigating the right to partition itself. The nature of the lawsuit becomes that of accounting as parties attempt to find common ground on the methods and costs of the partition itself.

As each case is unique, property owners would be well-served to seek experienced counsel familiar with the intricacies of partition actions and the most efficient partition referees in the business. At Underwood Law, our knowledgeable attorneys are here to help. If you are trying to decide on the manner of a partition sale, attempting to buy your own property after a judgment of partition, or if you just have questions, please do not hesitate to contact our office.

Go here to get more details.

 

 

Contact Information