Fremont Partition Lawyers
Fremont is a city in Alameda County, located in the East Bay. It is the closest East Bay city to the high-tech Silicon Valley network of businesses and has a strong tech industry presence. Like any rapidly growing community, residents of Fremont often find themselves trapped in joint ownership of property when one co-owner wants to sell, but the other co-owners do not want to sell their ownership rights. Luckily, a Fremont Partition Lawyer can tell you that any co-owner has the absolute right to divide the property and sell their portion with the legal remedy of “Partition.” Often, Fremont Partition Lawyers find that joint ownership problems fall into four broad categories:
- Father/Mother-Son/Daughter tenants in common in real estate;
- Brother-Sister shared tenants in common in real estate;
- Investor-Investor shared tenants in common in real estate; and
- Non-Married Partners shared tenants in common in real estate;
A partition action is a lawsuit brought by a property owner seeking the court to force the sale of a jointly owned piece of real property. Typically, partition actions occur when co-owners of real estate have disputes about its ownership and use, and one of them seeks to end their ownership interest. That is, a partition action has no other purpose than to sever the unity of possession between cotenants in a piece of real property. (Rancho Santa Margarita v. Vail (1938) 11 Cal.2d 501, 539.) Currently, partition actions are governed by the provisions set forth in the Code of Civil Procedure section 872.010. These statutes set out a general process by which a property may be partitioned.
Historically, the term "partition" comes from the basic word to break into "parts" as in physically dividing real estate in half. For example, if two siblings inherited ten acres of farmland, the property could historically be divided into five acres a piece for each of them. As most people now live in single-family homes, which cannot simply be "split in half," courts will instead order that the property be sold and the proceeds, or equity, be "split in half." A knowledgeable Fremont Partition lawyer will be able to provide good advice about all aspects of this process.What Are the Steps in a Partition Action?
Under the Partition of Real Property Act, the court instead appoints an appraiser to do the heavy lifting. The new statute states that the court “shall determine the fair market value of the property by ordering an appraisal.” (CCP § 874.316.) The court doesn’t have to be the one to order the appraisal, but this is only if all the co-owners agree to a different method of valuation.
If, however, an appraisal occurs, it shall be conducted by a disinterested third-party real estate appraiser licensed to determine the fair market value of properties. After the appraisal is conducted, parties may file objections to the value and can even offer additional evidence of value to the court.
After the valuation is complete, parties will be introduced to the key feature of the new statute: the buy-out option. If a co-owner requests a partition by sale, then the court will notify the other co-owners that they may buy all the interests of the cotenant that requested the partition. (CCP § 874.317.)
This is, essentially, a right of first refusal. The co-owners who don’t want the property sold now have the option to simply buy out the requesting party. Additionally, the buy-out price will be based on the property’s valuation, determined earlier in the litigation. And if one or more parties exercise the buy-out, then the court will reapportion ownership percentages based on the price paid. An experienced Fremont partition lawyer will be able to explain this process in detail.What Are Claims for “Contribution”?
Code of Civil Procedure section 874.140 states that the “court may, in all cases, order allowance, accounting, contribution, or other compensatory adjustments among the parties according to the principles of equity.”
The court in Hunter v. Schultz (1966) 240 Cal.App.2d 24 stated that the payments for interest, taxes, and insurance made by any co-tenant could be subject to reimbursement. These claims for reimbursement are commonly known as “offsets” in a partition action.
Further, the court under Milian v. De Leon (1986) 181 Cal.App.3d 1185, announced that a co-tenant who expends money for the preservation of the property, or with the [acceptance] of their co-tenant(s), is entitled to reimbursement for those expenditures before the division of the proceeds among the property owners.
That is, the general rule is that compensatory adjustments are appropriate for improvements that enhance the value of the property for all owners’ benefit. (see Wallace v. Daley (1990) 220 Cal.App.3d 1028, 1035-1036.) A Fremont Partition lawyer will know about these aspects of the process.Can a Partition Action Be Settled Through Mediation or Negotiation?
Generally, anyone considering filing a lawsuit should consider all of their alternatives, including an informal resolution of the problem. This can take the form of a discussion with the other owner or owners about agreeing to sell the property, negotiating with the co-owner to create a formula to divide the proceeds from the sale, or retaining a lawyer to engage in a mediation with the other owners.
Throughout the partition process, and even on the day of trial, any of the owners can make an agreement about the sale of the property. This can happen through a phone call, through negotiations between the parties' lawyers, or through a mediation session with a retired judge or trained mediator. There are many benefits from a mediation session, including confidentiality provisions contained in the law in Evidence Code sections 1115 through 1129.
Specifically, Evidence Code section 1119, subdivision (a), provides "no evidence of anything said or any admission made for the purpose of, in the course of, or pursuant to, a mediation or a mediation consultation is admissible or subject to discovery, and disclosure of the evidence shall not be compelled in any arbitration, administrative adjudication, civil action, or other noncriminal proceeding in which, pursuant to law, testimony can be compelled to be given." A Fremont partition lawyer will be familiar with this process.A Partition Case Study: Fresh Group, Inc. v. Wu:
The two most common types of partitions are partition in kind, and partition by sale. Partitions in kind are when the property is physically split between the parties. Partitions by sale are when the property is sold, and the proceeds are divided between the parties based on their ownership interests. In partitions by sale, the property can either be sold in a private sale or auctioned off in a public sale.
Parties are often confronted with issues when attempting a partition by sale. The property may have dropped in value, which would make a sale less appealing. Maybe the winds of the economy changed direction, and so parties would want to keep the property instead. But no matter what changes may have occurred, parties are still obligated to obey a court’s order. Even if that means selling when one really does not wish to.
Fresh Group, Inc. V. Wu, Cal.App.Unpub. (2003) WL 21367938, is an example of when a party gets cold feet when it comes time to sell. Lots of things can happen in between a partition lawsuit commencing and the court delivering its verdict, which can change one’s mind on whether to sell the property or not. Oftentimes, these things are outside of the parties’ control, but by the time the court orders a sale it is too late to change tracks.
The property at issue in Fresh Group was an unimproved piece of real property zoned for commercial use and owned by Fresh Group, Inc. (Fresh), Hsin-Yi Wu and Chung Mei-Chu Wu (the Wus), and James Chen as tenants in common. (Id., at 1.) James Chen held a five percent interest, the Wus had a 20 percent interest, and the remaining 75 percent interest was acquired by Fresh. (Id.) James Chens’ sister-in-law, Tauan Chen, was the president and CEO of Fresh. (Id.)
Tauan Chen and her husband paid most of the property taxes and expenses for the property, with the Wus and James Chen unwilling to contribute. (Id.) In September 1999, Fresh sued for ownership over the property through adverse possession, claiming that the Wus and James Chen had abandoned the property. (Id.) Fresh also sought money the Wus and Chen allegedly owed for taxes and expenses. (Id.)
In response, James Chen filed a cross-complaint asking for a partition by sale in January 2000. (Id., at 2.) The Wus admitted James Chen’s allegations and joined with his partition request. (Id.) Fresh argued that James Chen was not entitled to partition. (Id.)
The Wus and James Chen eventually agreed to pay Fresh the share of taxes and expenses that they owed. (Id.) The case proceeded solely on the issue of partition by sale. (Id.) Fresh did not oppose partition by sale, and actually wanted a sale through public auction with no minimum bid. (Id.) The Wus and James Chen wanted either a private sale or a public sale with a minimum bid of the average of two appraisals. (Id.)
However, the parties’ minds began to change at trial. (Id.) The Wus told their attorney that if a minimum price for the property couldn’t be reached, then they would prefer to have the court partition the property in kind. (Id.) However, the Wus never sought to amend their answer to include this new view. (Id.)
James Chen also stated his preference for a partition in kind if the property could not sell for a minimum bid based on appraisals. (Id., at 3.) If a partition in kind was not possible and the property could not be sold either through a private sale or a public sale with a minimum bid based on the average of two appraisals, James Chen wanted to wait a couple of years before trying to sell the property. (Id.) Similarly, the Wus wanted to wait a year if a public sale with a minimum bid that was the average of two appraisals was unsuccessful, since the economy was not good at the time. (Id.)
Tauan Chen wanted the property to be sold by public auction with no minimum bid. (Id., at 2.) Tauan Chen also testified that she had attempted a partition in kind before, but this was unsuccessful as there were issues with zoning. (Id.)
The trial court ordered a temporary judgment for partition by sale at public auction with no minimum bid. (Id., at 3.) The trial court reasoned that the public auction was needed because the parties could not agree on what to do with the property in this case and the trial court did not order a minimum since the parties could not agree on a minimum. (Id.) The Wus appealed, and the Court of Appeal affirmed the trial court’s judgment. (Id.)
Fresh Group is indicative of how circumstances outside of one's control can change how parties view a lawsuit. At the start of a lawsuit, a partition by sale may look attractive. However, cases can take a long time winding their way through the courts before a judgment is finally handed down, and much can change in the meantime. Unfortunately, sometimes it may be too late to change course.
The first issue the Wus raised was that partition by sale would be unfair. (Id.) The Wus pointed to the poor economy and the fact that they and James Chen did not want a partition by sale. (Id.) However, this argument was flimsy because James Chen was the one who initiated the partition by sale through his cross-complaint, which the Wus had originally agreed with. (Id.) On top of that, neither of the parties amended their pleadings to reflect their new positions, so the Court of Appeal refused to consider this issue. (Id.)
The Wus then argued that partition in kind could still be allowed. (Id., at 4.) However, James Chen’s cross-complaint for partition by sale stated that a partition in kind would be inequitable, a statement that the Wus also admitted. (Id.) Fresh did not dispute this statement either. (Id.) Since no party seemed to have an issue with James Chen’s statement that a parition in kind would be inequitable, the issue was never brought before the trial court. (Id.) Additionally, since all the co-tenants agreed to a partition by sale in their pleadings, the Code of Civil Procedure required the court to order a partition by sale. (Id.) The Court of Appeal wrote:
“Because the pleadings failed to frame any issue regarding partition in kind, Fresh could hardly be expected to adduce evidence at trial on the subject. Fresh was not required to prove at trial that partition in kind would be inequitable. Nor was the trial court required to apply the “principle of owelty” to enhance a partition in kind remedy. Partition in kind was not before the trial court because the pleadings limited the issue to partition by sale.” (Id.)
The Court of Appeal rejected all of the Wus arguments since they all lacked any merit and upheld the trial court’s partition by sale order. (Id., at 5.)
Fresh Group is illustrative of how changing one’s mind in the middle of litigation can backfire horribly. In Fresh Group, all of the parties were on board with a partition by sale at the start. But due to the economy making a downward turn, two of the parties suddenly wished to renege on their initial demands but failed to amend their initial pleadings.
This new economic situation led to the Wus scrambling to find a legal foothold for their new position. Unfortunately for the Wus, their arguments were mostly senseless and unpersuasive. Fresh Group teaches that if you’re going to change your mind in the middle of litigation, you need to be prepared with strong arguments and the proper legal authorities for the courts to take you seriously.How the Underwood Law Firm Can Help
As seen in Fresh Group, outside circumstance can affect a party’s stance on partitions. It is important for parties to go through the proper legal processes and present strong legal arguments for their cases if their positions do change.
Here at Underwood Law, our knowledgeable attorneys are here to help navigate the complex web of case law and statutes surrounding partitions. If you are trying to plan a partition order, or just have any questions, please do not hesitate to reach out to our office.
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