Code of Civil Procedure (CCP) Section 873.520 – Determination of Public Auction or Private Sale
Code of Civil Procedure section 873.520 allows the court to determine whether to sell the property in a public auction or private sale, or to defer determination of the matter to the partition referee appointed to sell the property. This provision is important because it sets up the two basic types of partition sales that can occur.
Code of Civil Procedure section 873.520 states
The property shall be sold at public auction or private sale as the court determines will be more beneficial to the parties. For the purpose of making this determination, the court may refer the matter to the referee and take into account the referee's report.
(Amended by Stats. 1976, c. 73, p. 110, § 6.)What is an example?
“Shawn” and “Julie” are an unmarried couple who want to buy a home together. They find a nice home in Los Angeles and buy it as joint tenants with a one-half interest each. They then move in together.
Unfortunately, Shawn and Julie’s relationship doesn’t work out, and they break up. They cannot agree on what to do with the property. Shawn wants to sell the property and move on with his life, so he sues for partition by sale.
Eventually, the court appoints a referee. The referee investigates and recommends to the court that the partition is sold at a public auction. The referee believes that a public auction will get the best deal for the couple on the property.
The court considers the referee’s report and testimony from the parties. Pursuant to CCP § 873.520, the court ultimately orders a partition by sale through public auction. The court concludes that a public auction will be more beneficial to the parties than a private sale.Law Revision Commission Comments (CCP § 873.520)
Section 873.520 continues a portion of the first sentence of former Section 775, but makes clear that there is no preference for either public or private sale. The reference to a referee for determination whether public or private sale would be more beneficial may be combined with a reference to determine whether partition by sale is more equitable than partition by division. See Section 872.820 and Comment thereto.Assembly Committee Comments
As is the case with most of the partition statutes, section 873.520 does not include a an “official” Assembly Committee Comment from the California Legislature. But this is not unusual. That’s because the Legislature 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.” This demonstrates that the intent of the Legislature was substantially in line with that of the Revision Commission.
As to the comment, it references that Section 873.520 comes from superseded section 775, which stated, in relevant part:
“All sales of real property made by referees under this chapter must be made at public auction to the highest bidder, upon notice given in the manner required for the sale of real property on execution unless in the opinion of the court it would be more beneficial to the parties interested to sell the whole or some part thereof at private sale; the court may order or direct such real property, or any part thereof, to be sold at either public auction or private sale as the referee shall judge to be most beneficial to all parties interested. . .”
The Commission commented on this provision, stating in relevant part:
“The portion of former Section 775 providing for sale at public auction or private sale if it will be beneficial to the parties is continued in Section 873.520; however, Section 873.520 makes clear that public auction is not preferred over private sale.”
As to how this statute plays out in practice, there is little in the way of guidance on any definitive factors that a court may use to determine which method of sale is better in the circumstances of each case. Instead, courts to make the decision under broad language of whatever will be “more beneficial to the parties.” (Cummings v. Dessel (2017) 13 Cal.App.5th 589, 599.)
Usually, though, the preference will be for a private sale on the market. This allows the property to potentially sell at its highest possible value. But if the parties prefer the sale to be done quickly, and aren’t as concerned about with extracting the highest possible sales price, then a public auction may be preferrable.