Indio Partition Lawyers

The city of Indio was originally a railroad town that began in the 1870s. Today, the city of Indio is known as the “City of Festival” and is currently the largest and fastest growing city in Riverside County’s Coachella Valley. According to Redfin, in June 2023, Indio home prices were down 8.6% compared to last year, selling for a median price of $530K. On average, homes in Indio sell after 46 days on the market compared to 32 days last year. There were 81 homes sold in June this year, down from 124 last year. With thousands of new planned housing developments in construction or being planned throughout Indio, residents who own real estate may face disputes with co-owners. There are at least four types of situations where a Indio Partition Attorney may be helpful:

• Investor-Developer co-ownership of property; 
• Ex Romantic Partner co-ownership of property; 
• Shared Family co-ownership of property; and
• Parent-Child co-ownership of property;

What Is a Partition Action in California?

Generally, partition is any division of real property between co-owners, where each co-owner obtains an ownership interest. A partition action is the forced sale of real property by a co-owner under the court’s supervision. Partition merely determines and allocates to the parties their respective interests in the property. (Cunha v. Hughes (1898) 122 Cal. 111.)

In the partitioning of property, the common interests in the property are segregated or terminated. (Summers v. Superior Court(Wan Fen Tan) 24 Cal.App.5th 138.) Partitions are generally favored by the and may occur by an agreement between the co-owners or by a judgment in an action. Typically, a partition may be made by either a physical division or sale of the property. in many modern transactions, a partition of the property by sale is preferable since often times, a division of the property will result in parcels that are not equal to the value of the whole property before the division. (Cummings v. Dessel (2017) 13 Cal.App.5th 589, 597.) Also, a “physical division may be impossible due to zoning regulations or may be highly impractical.” (Butte Creek Island Ranch v. Crim (1982) 136 Cal.App.3d 360, 365.) The best Indio Partition Lawyer will be able to share information on this process with you.

What Are the Steps in a Partition Action?

Generally, a partition action has four stages, which include (1) the filing of the lawsuit (2) an appraisal of the Property under the Partition of Real Property Act, (3) the determination of the parties’ interests, and appointment of a referee to sell the property, and (4) the division of the proceeds from the sale.

In California partition actions, the court must enter an interlocutory judgment where the court finds that the Plaintiff in a partition action is entitled to a partition. (CCP § 872.720.) The interlocutory judgment “determines the interests of the parties in the property and, unless it is to be later determined, the manner of partition.” (CCP § 872.720.) A top Indio Partition lawyer will be familiar with the process.

Can You Mediate a Partition Action?

A partition action can always be resolved informally at any time prior to the first day of trial, or entry of judgment. In fact, in numerous instances, just filing the partition itself leads the other party to seek a resolution between them. We always encourage the parties to talk throughout every phase of the process, as that can lead to the best outcomes for everyone.

From our perspective, every piece of litigation is just part of a larger “negotiation.” In any negotiation, the party who has the best leverage is usually able to achieve a more favorable outcome. The lawsuit provides the client with more leverage because they have more options available to them than without the prospect of a resolution from a judge. As such, all that a lawsuit does is provide one party with more leverage in the negotiation about how to resolve the dispute. For this reason, the best way to informally resolve a dispute is to combine discussions with active litigation, so that the matter can be quickly resolved without unnecessary expense. Throughout the process, our attorneys are in touch with our clients about their options and the prospects for informal resolution through mediation or negotiation. A knowledgeable Indio Partition Attorney will be able to give you good advice on these issues.

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.) An experienced Indio Partition Attorney will be intimately familiar with these matters.

A Partition Case Study: Shaffer v. Wallace (2007): Credibility and Equity in Partition

Partition actions are considered equity actions under California law. In equity actions, courts have broad discretion over many issues in the lawsuit. For partition actions in particular, courts have extensive power in determining the parties’ ownership interests. Though courts may have broad equity powers in partition actions, there are still statutory requirements that courts must comply with.

Credibility is even more vital in partition actions since the court has such vast power in deciding a party’s fate. If the court finds a party not to be credible, it will be close to impossible for that party to prevail on any of their arguments. This can quickly spiral into disastrous consequences.

What Led This Case to the Court of Appeal?

The property at issue in Shaffer v. Wallace (2007) Cal.App.Unpub. WL 2773841, consisted of two parcels of land known as the Foothill and Osborne properties. (Id., at 1.) Otis Wallace and his brother bought the property in 1982 and started a horse-boarding business called Wallace Ranch Livery Stables. (Id.) Wallace had a permit for stabling about seventy horses on the property. (Id.)

Later on, Wallace fell into hard times. (Id.) Wallace’s brother became disabled after an accident and Wallace’s nephew, Darron, became a co-owner of the Osborne property. (Id.) Wallace and Darron fought over control of the property. (Id.)

In 1999, Darron filed for bankruptcy protection. (Id.) In response, Wallace sued Darron in bankruptcy court. (Id.) In November 2022, the bankruptcy lawsuit settled. (Id.)

As part of the settlement, the bankruptcy court valued the Osborne property at $450,000. (Id.) The bankruptcy court then allowed Wallace to buy Darron’s one-half interest in the Osborne property by January 27, 2003. (Id.) If Wallace could not buy Darron’s interest by then, the property would be sold, and Wallace would lose his business permit. (Id.)

Wallace was in trouble though, because he had been forced into bankruptcy last year and had horrible credit. (Id.) Wallace formed a plan with his friend, Gene Shaffer, for Wallace to keep his property interest and continue his horse-boarding business. (Id.)

Under Wallace’s plan, Wallace would quitclaim his one-half interest to Shaffer. (Id.)

Shaffer would then use his excellent credit to get a loan for buying Darron’s one-half interest, using the property as collateral. (Id.) The lender would pay off any mortgage on Darron’s interest and Darron’s equity. (Id.) Afterwards, Shaffer would quitclaim his interest back to Wallace, plus half of the remaining interest. (Id.) Basically, Shaffer would a quarter interest in the Osborne property by using his credit. (Id.)

Wallace’s plan, however, was never documented. (Id., at 2.) Shaffer learned from Darron that a neighbor was offering one million dollars for the Osborn property if Darron eliminated Wallace’s interest. (Id.) Without telling Wallace, Shaffer offered Gonzalo Posada a partial interest in the Osborn property for $50,000. (Id.) There was no written agreement regarding the type or size of Posada’s interest. (Id.)

Wallace had given up on trying to find other ways to finance the deal and decided to continue with Shaffer’s deal. (Id.) At the time, Wallace appeared to know that Posada was a part of the deal and would receive an equal share of Darron’s interest. (Id.)

After the close of escrow, Shaffer told Wallace that if he wanted Shaffer to reconvey his share of the property, Wallace would have to execute a $150,000 note in Shaffer’s favor. (Id.) Shaffer would then transfer a one-third interest to Wallace and a one-ninth interest to Posada. (Id.) Shaffer would keep a five-ninths interest for himself. (Id.)

Neither Wallace nor Posada challenged Shaffer’s deal. (Id.) Posada testified that he did not want to endanger his friendship with Shaffer. (Id.)

It is unclear whether Wallace really understood what happened with his ownership interest. (Id.) Wallace claimed he thought that he had received a one-third interest in Darron’s half of the property in addition to Wallace’s half he already owned and could continue to run his business. (Id.)

Meanwhile, Shaffer shopped around for potential buyers and made so-called improvements to the property, including building more stables that he rented for his own benefit. (Id.) Shaffer charged Wallace and Posada for expenses on these so-called improvements and for maintenance. (Id.)

At some point, Shaffer told both Wallace and Posada that he wanted to kick Wallace off the property. (Id.) Shaffer and Wallace continued to clash until they stopped speaking to each other. (Id.) Eventually, Wallace became delinquent on the note he executed for Shaffer. (Id.)

In June 2004, Shaffer sued Wallace and Posada for partition by sale and an accounting. (Id.) Wallace cross-complained, seeking partition and damages for interfering with his business. (Id.) The trial was bifurcated into two phases. (Id.)

In the first phase, the trial court valued the property at $1.5 million. (Id.) This valuation was not contested. (Id.)

In the second phase, the parties testified regarding their various understandings of the deal and the income and expenses of the property. (Id.) The trial court did not find Shaffer to be credible. (Id.) Additionally, the trial court granted Wallace’s motion to amend the cross-complaint and include the claim that Shaffer fraudulently induced Wallace and Posada into the deal. (Id.)

After all of the testimony, the trial court concluded that the deal’s structure was what Wallace had described. (Id, at 3.) The trial court also ruled that Shaffer had altered the deal to serve his own self-interests and Shaffer also fraudulently induced Wallace and Posada into the deal. (Id.) As such, the parties’ respective property interests would need to be adjusted. (Id.)

The court ordered a repartitioning of the property that would give Wallace a four-sixths interest, Posada a one-sixth interest, and Shaffer a one-sixth interest. (Id.) Additionally, Wallace remained liable to Shaffer for the $150,000 notes. (Id.) The trial court awarded Wallace and Posada $26,580.54 and $8,861.28 respectively for their expense and profit adjustments. (Id.) The trial court also awarded $24,702.62 for costs. (Id.)

Shaffer filed objections to the trial court’s judgment but did not challenge any of the findings or the award. (Id.) Shaffer also motioned to tax the costs, but judgment had already been entered. (Id.) Meanwhile, Shaffer also appealed. (Id.) Eventually, the trial court declined to consider Shaffer’s motion to tax costs, holding that it did not have jurisdiction over the motion because of Shaffer’s appeal. (Id.) The Court of Appeal affirmed in part and denied in part the trial court’s judgment. (Id.)

Shaffer’s Holding: Being Credible and Staying Equitable

Shaffer first argued that there was insufficient evidence for the trial court’s finding of fraudulent inducement. (Id.) Shaffer, however, failed to request any clarification from the trial court regarding the basis of their ruling. (Id., at 5.) Additionally, the Court of Appeal found that there was sufficient evidence of Shaffer’s fraud, including Shaffer’s own testimony. (Id.)

Shaffer claimed that Wallace failed to read the escrow instructions, which negated Wallace’s reliance on Shaffer. (Id., at 6.) The trial court repeatedly found that Shaffer was not credible and accepted Wallace’s understanding of the deal. (Id.) The trial court concluded that Wallace’s reliance on Shaffer was justified, and the Court of Appeal agreed, rejecting Shaffer’s argument. (Id.)

Next, Shaffer contended that he was prejudiced by Wallace’s amendment to the cross-complaint. (Id.) He argued that he did not have any notice of Wallace’s fraud claim so he failed to depose several witnesses whose testimony might have helped his case. (Id.) Additionally, Shaffer claimed he lost his opportunity to claim a jury trial on the fraud claim. (Id.)

Wallace’s argument ignored the fact that partition actions are equity actions. (Id.) Wallace’s motion to amend the cross-complaint did not seek additional remedies. (Id.) Instead, Wallace argued that there was enough evidence at trial to establish fraud. (Id.) In equity actions, the trial court had broad powers to determine the parties’ respective ownership interests. (Id.) The Court of Appeal concluded that Wallace did not suffer prejudice from the amendment to the cross-complaint. (Id.)

Finally, Shaffer argued that the trial court erred in awarding Wallace $18,000 in expert fees. (Id., at 7.) California law directs the court to apportion the costs of partition among the parties according to their respective interests, or in any other equitable manner. (Id.) The costs of partition include expenses paid for the common benefit. (Id.)

The trial court seemingly acted based on testimony from Wallace’s expert. (Id.) There was no evidence, however, that the trial court determined which of the expert’s costs was for the common benefit. (Id., at 8.) The Court of Appeal found that the trial court failed to apportion the expert fees in compliance with the statute. (Id.) The Court of Appeal reversed the trial court’s judgment on the expert’s fees and affirmed the judgment on everything else. (Id.)

Shaffer shows how important credibility is in litigation. Losing one’s credibility before the court could essentially be a death sentence for one’s case. This is especially true when nothing is written down and the trial turns into a “he-said, she-said” situation.

Furthermore, Shaffer demonstrates how partition being an equity action can affect the outcome of litigation. In equity actions, trial courts often have broad powers. Even with these broad powers though, there are certain statutory requirements that trial courts must follow in partition actions.

How Underwood Law Firm Can Help You

As seen in Shaffer, credibility is crucial in litigation. Oftentimes, it is the most influential factor in a court’s decision. Furthermore, courts have broad powers in partition lawsuits because partition lawsuits are considered equity actions. Credibility is therefore even more important in partition actions because of how much power courts have.

Here at Underwood Law Firm, 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.

Learn more here.