Huntington Beach Partition Lawyers

Huntington Beach is a seaside city located in Orange County, and is well known for its almost ten-mile-long stretch of sandy beaches, mild climate, and surfing beach culture, which gave rise to the nickname “Surf City.” Huntington Beach is a tourist city with many condominiums in the area to support the city’s attractions. Joint owners of such property are not immune to disputes and differences. With the help of a Huntington Beach Partition Lawyer, a co-owner of a shared property may need to call upon the legal remedy of partition to settle disagreements with other joint owners. Huntington Beach Partition Attorneys find partition actions to be the best remedy for fighting co-owners in four broad categories:

• Investor-Investor building dispute;
• Parent-child building dispute;
• Boyfriend-girlfriend building dispute; and
• Shared building dispute;

What is a Partition Action in California?

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.” The best Huntington Beach Partition Lawyer will be able to share information on this process with you.

What are the Steps in a Partition Action?

First, a partition action is filed. A partition action can be filed if one co-owner of real property or a piece of real estate wishes to sell the property or piece of real estate in question but the other co-owners or co-tenants do not wish to sell their ownership rights.

Second, the court may appoint a court referee to oversee the sale of the property in question. The sales procedure includes that all parties agree to the terms and conditions of the sale in writing. If the parties can not agree, as partition actions are usually very contested issues, then the referee that the court appointed may recommend terms and conditions to the court. Then the court will hold a hearing to decide whether or not to accept those terms and conditions.

Third, in California, the property’s value will be appraised via a third party or another property appraisal with no ties to any of the parties. While this is not required in all states, it is recommended to make sure that all parties are on the same metaphorical page as to the potential sale proceeds of the property in question.

Fourth, the referee will conduct the sale in the method most agreeable to all of the party’s goals. This can be via a public auction or a private sale. Regardless of the specific method of partition by sale, the court will determine if the sale was “fair.” If it is decided that the property’s sale proceeds had a lack of proper notice, the sale amount is not within reasonable the value of the property, or if the proceeds were unfair- the court would rule that the property will be up for sale again.

Lastly, the court will order that the proceeds of the sale, minus any court litigated or approved offsets or costs, will be distributed equitably amongst all of the co-owners or people with interest in the property. A top Huntington Beach Partition lawyer will be familiar with the process.

Can you Recover Attorneys’ Fees in a Partition Action?

An action for partition may include an accounting so that the respective rights of the parties can be adjusted and settled. (Lazzarevich v. Lazzarevich, (1952) 39 Cal. 2d 48, 50–51.) A cotenant who has advanced fund to pay common expenses is entitled to reimbursement from the sale proceeds before the balance is divided and distributed to the cotenants. (Southern Adjustment Bureau, Inc. v. Nelson (1964) 230 Cal. App. 2d 539, 541.) A cotenant out of possession can require the cotenant in possession to account for rents and profits or other compensatory adjustment in the division of sale proceeds. (CCP § 872.430.)

The Court may award attorneys’ fees in the partition action that are paid by a party to the action for the common benefit of all the co-owners. (CCP § 872.010.) The Supreme Court has spoken on this issue directly, holding that under former section 796, the predecessor to the current partition cost statute, “counsel fees may be allowed … for services rendered for the common benefit even in contested partition suits.” (Capuccio v. Caire (1932) 215 Cal. 518, 528-529 (Capuccio).)

Moreover, cases interpreting those sections continue to permit the allocation of attorney fees in contested partition actions. (Forrest v. Elam (1979) 88 Cal.App.3d 164, 174.) From these authorities it is evident that the “common benefit” in a partition action is the proper distribution of the “‘respective shares and interests in said property by the ultimate judgment of the court.’ ” (Capuccio, 215 Cal. at p. 528.) This sometimes will require that ” ‘controversies’ ” be ” ‘litigated’ ” to correctly determine those shares and interests but this ultimately can be for the common benefit as well. The fact that a party resists the partition does not change this. (See Randell v. Randell (1935) 4 Cal.2d 575, 582 [“The presence and litigation of controversial issues between all the parties does not preclude the allowance of attorney’s fees for services connected with such issues where such services are found to be for the common benefit of the parties.”].) A knowledgeable Huntington Beach Partition Attorney will be able to give you good advice on these issues.

What Are Claims for “Contribution”?

Following the sale of the property, the referee will divide the proceeds of the sale among the parties in according to amounts expended for the “common benefit.”

When the sale is confirmed by the court, the court may enter an order about the proceeds of sale. Under the law, the sale proceeds must be applied in a defined order. Specifically, Code of Civil Procedure section 873.820 states that the sale proceeds go towards (a) payment of expenses of the sale, (b) payment of the other costs of partition, (c) payment of any liens on the property in priority, (d) and distribution of the remainder to the parties in proportion to their shares as determined by the court.

Generally, the last part of the priority list includes what is commonly known as an “accounting” or a determination of whether one party has contributed more than their fair share to the property in the form of taxes, improvements, or other benefits for the property. For example, if one party is a 50% owner of the property, but has paid all of the property taxes for the property, then that property owner will have a claim for the remaining 50% above their interest in the property. An experienced partition lawyer will be able to help a co-owner determine their claims to the proceeds and make these arguments to the court in an effective way. An experienced Huntington Beach Partition Attorney will be intimately familiar with these matters.

A Partition Case Study: Hogan v. Hogan (2022)

In Hogan v. Hogan (2022) 2022 WL 897003, Andrea Hogan brought suit against her parents, Gregory and Laurie Hogan, seeking to partition the Property. From 1987 to 2014, Andrea’s parents were the sole owner of the Property. In 2013, Andrea helped pay the Property’s delinquent taxes when Gregory asked for her help. Then, in 2014, Gregory again asked Andrea for assistance. From this point forward, Andrea agreed to pay all taxes, insurance, repair, and maintenance costs for the Property until it was sold. Gregory did not make any payments for the taxes, insurance, repair, and maintenance costs. In return, Andrea would get a one-third ownership interest in the Property. Gregory retained an attorney who prepared the deed, conveying an unlimited one-third interest to Andrea.

At trial, Gregory admitted to initiating and directing his attorney to prepare the grant deed conveying title to Andrea, and that it was his idea to give her the one-third interest in the Property. He further testified that he had given Andrea the grant deed so that she could substantiate her ownership interest in the case that she was confronted by any tax authorities. Andrea’s sister, Kari, testified that Gregory admitted outside his attorney’s office that he was the one who decided to give Andrea the one-third interest, despite being advised by his attorney to give Andrea only a 10% interest. Andrea and Laurie testified that Gregory told Andrea four or five times about their agreement for her to pay for the expenses of the Property in exchange for a one-third ownership interest. Andrea, Kari, Laurie, and Gregory all testified that Andrea was and still is the only person with the ability to pay for the Property’s taxes, insurance, repairs, and other Property related expenses. The trial court determined that Andrea was entitled to a one-third tenant in common interest in the Property.

However, the trial court ruled against Andrea regarding the distribution of the proceeds from the Property’s sale and denied her $75,000 request for reimbursement for what she spent on the Property. The trial court held that Andrea was only entitled to share in the appreciation of the Property that accrued only after she became an owner stating, “Andrea is entitled to share one-third of the net equity that accrued after December 8, 2014 to the date of sale.” Andrea appealed.

The California Fourth District Court of Appeal disagreed with the trial court and reversed the trial court’s interlocutory judgment and remanded the trial court to reconsider its decision in awarding the unequal distribution of proceeds from the Property. With respect to the trial court’s finding that Laurie and Gregory intended to share only prospective equity with Andrea in exchange for her financial support, the Court of Appeal found that there was no credible evidence that this is what the Parties intended. Moreover, there was no credible evidence that the parties ever discussed that Andrea would receive anything less than a full one-third ownership interest. Additionally, the trial court’s “statement of decision does not identify or rely upon a single piece of evidence in support of” its finding.

Although the record clearly evidences Andrea’s rights to share in one-third of the Property, the trial court wrongly determined that Andrea failed to prove under any fact, equitable principles, or law, her right to one-third of the property equity. The Court of Appeal also disagreed with the trial court’s assertion that Andrea’s share of the net equity was bargained for. The Court of Appeal held that the strongest evidence to support her right to one-third of the total property equity was the grant deed. Notably, the grant deed “did not include any exception or limitation of rights, and specifically, it did not reserve the existing equity in the home to the Parents.” This showed that Laurie and Gregory knowingly conveyed to Andrea an unrestricted full one-third interest in the Property. Further, the evidence showed that Laurie and Gregory could no longer afford the Property’s expenses, and thus asked Andrea for help.

Despite their disagreement with the trial court’s assertion that Andrea’s share in the prospective equity was bargained for, the Court of Appeal recognized the trial court’s broad discretion in partition matters. However, the Court of Appeal reversed on the ground that the trial court relied on its own research and experience to establish that the Property appreciated in value from 2014 to the time of trial. At the trial, the court released both parties’ real estate valuation experts. Also, the trial court lacked evidence and testimony showing that the Property did in fact appreciate in value after Andrea became an owner. The Court of Appeal found that the parties’ testimony actually showed that the Property did not appreciate.

At trial, the court conducted its own online research on the Property and based its decision on its familiarity with the neighborhood, and a Zillow estimate. Despite the trial court’s independent real estate research, it was ultimately wrong. First, the Model Code of Judicial Conduct, Model rule 2.9(C) “specifically precludes a judge from investigating facts independently and requires that it only consider evidence presented and facts that may be judicially noticed.” (ABA Model Code of Jud. Conduct, rule 2.9(C).) Here, the trial court’s independent research was not subject to judicial notice. Further, the trial court’s reliance on Zillow was troublesome because “the Zestimate should not be used as a basis of any specific financial transaction because data sources may be incomplete or incorrect.” (In re Ogletree (B.A.P. 9th Cir., 2020 2020 WL 6557434, at *5.)

Thus, the trial court’s determination that Andrea would be adequately compensated for her investment by the appreciation from 2014 onward was only pure speculation and not based on the evidence on hand. The Court of Appeal held that the trial court’s finding that Andrea failed to prove her right to a one-third interest in the Property was not a proper conclusion after weighing the credible evidence. The trial court’s conclusion ultimately deprived Andrea from sharing in any of the equity and reimbursement for the $75,000 she spent on the Property.

Courts may apportion sale proceeds in an equitable manner as the partition statutes are equitable in nature. Here, based on the record and the undisputed fact that Andrea, Laurie, and Gregory each held a one-third ownership interest in the Property, the Court of Appeal found that the equity concerns appear to weigh in Andrea’s favor based on her major contributions to the Property.

How the Underwood Law Firm Can Help

A court’s determination of ownership interests in a property depends on the facts and circumstances of each particular case. Factors such as agreements and who pays for certain expenses for the property can ultimately affect the outcome of a partition case. If you are considering partition as an option, or find yourself defending one, then you may benefit from good legal advice on the topic. Please contact Underwood Law Firm, P.C., for an initial consultation.

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