Code of Civil Procedure (CCP) section 872.630 - Status and Priority of Liens
Code of Civil Procedure section 872.630 requires the court in partition lawsuits to determine the condition of all liens on the property at issue. This statute thus serves a number of functions. It provides for title to be accurately ascertained prior to partition, and then later allows for distribution of the sales proceeds to occur effectively.
Code of Civil Procedure section 872.630 states:
(a) To the extent necessary to grant the relief sought or other appropriate relief, the court shall determine the status and priority of all liens upon the property.
(b) The court may appoint a referee to ascertain the facts necessary for the determination required by this section. Upon application of the referee or a lienholder, the court shall direct the issuance of process to compel attendance of witnesses, the production of books, documents, or things, and the filing of verified claims. The report of the referee thereon shall be made in writing to the court and shall be confirmed, modified, or set aside and a new reference ordered, as the justice of the case may require.
(Amended by Stats. 1976, c. 73, p. 110, § 6.)What Is an Example?
“Shawn” and “Julie” are an unmarried couple who decide to move in together. They buy a house in Los Angeles as joint tenants and take out a mortgage on the home. Shawn and Julie split the mortgage payments equally.
Later, Shawn begins having money issues of his own. Without telling Julie, he takes out another mortgage on his ownership interest of the property. Shawn makes payments on this mortgage by himself.
Eventually, Shawn and Julie’s relationship deteriorates, and they break up. They cannot agree on what to do with the property. Julie wants to sell the house and move on, so she sues Shawn for partition by sale.
At trial, the court rules for a partition by sale and appoints a referee to determine the status of liens on the property, pursuant to CCP § 872.630. The court also compels production of all necessary evidence. The referee reports to the court that Shawn incurred another lien on the property that still has payments remaining. The court rules that the original mortgage takes first priority while Shawn’s mortgage takes second priority when distributing the sale proceeds of the partition sale.Law Revision Commission Comments (CCP § 872.630)
Section 872.630 supersedes the provisions of former Sections 761 and 762, which applied only to determination of the status of liens of record held by persons not made parties to the action. Section 872.630 extends this requirement to all liens and simplifies the provisions relating to ascertainment of the status of liens by a referee. The provision for ascertainment of other security is omitted. See former Section 772 and Comment thereto.Assembly Committee Comments
As is the case for most of the partition statutes, Section 872.630 does not have an official comment by the California Legislature. But this is primarily because the Legislature essentially endorsed an overall adoption of the Law Revision Commission suggestions when it passed the new partition statutes in 1976.
In fact, the introduction to Assembly Bill 1671 (the bill that contained the new partition laws) states that the Revision Commission’s recommendations “reflect the intent of the Assembly Committee… in approving the various provisions of Assembly Bill 1671.” Thus, it’s fair to assume that the intent of the Legislature was substantially in line with that of the Revision Commission.
Here, the Revision Commission references former sections 761 and 762, now repealed. Both had archaic intricacies which made them somewhat unwieldy in modern-day practice. For instance, section 761 provided that the Court should appoint a referee to ascertain the order of and amount due on liens affecting the property. But it applied this rule only where the liens were held by persons “not made parties to the action.”
Section 762, meanwhile, had similar shortcomings. It set out the specific service procedures for when the referee made the lien determinations, but again restricted notice to “person[s] having outstanding liens of record, who is not a party to the action.”
In passing section 872.630, though, the Legislature combined these two statutes to streamline the process of lien determinations by removing any reference to persons or entities not made a party to the lawsuit.
This streamlined process is important down the line when and if the property is eventually partitioned by sale. As part of the distribution, the court must first pay off “any liens on the property in their order of priority except liens under which the terms of sale are to remain on the property.” (CCP § 873.820.) This disbursement occurs before any residue flows to the parties in proportion with their ownership shares. As such, section 872.630 primarily affects the ease with which the distribution process occurs.