Newport Beach Partition Lawyers

Newport Beach is a coastal city in southern California located in Orange County, with Los Angeles to the north and San Diego to the south. As a rapidly growing community that hosts millions of tourists a year, multiple parties often own Newport Beach parcels of property, and find themselves needing a partition action. In these situations, sometimes joint owners cannot agree on the following function of their shared real estate. One co-owner may want to sell to the highest bidder and retire, while another may want to invest further and build something like a hotel. In these circumstances, seeking advice from a Newport Beach Partition Lawyer may be beneficial. There are at least four instances where a Newport Beach 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?

Partitions are lawsuits that split up the property between multiple co-owners so that each can take their equity out of the home. The prototypical partition are between siblings, former romantic partners, or business partners. Both own parts of the property, but only one wants to end the relationship and take their money out. Partitions enable this to happen, usually ending with a court-ordered sale of the subject property. 

Basically, any person who is an owner of real estate can bring a partition action in California. Code of Civil Procedure section 872.710, subdivision (a), states "A partition action may be commenced and maintained by any…owner of…such property." California Civil Code section 872.210 provides a property owner with the "absolute right to partition" absent a valid waiver. Thus, a partition action can be brought by anyone who no longer wants to own jointly owned real estate, other than spousal property.

Generally, a partition action cannot be stopped absent a valid waiver. The instances in which a court has found a valid waiver have generally involved some sort of written contract or adverse possession of property. As such, many parties try to stop a partition action through mediation, or a buy-out agreement. In most instances, the parties to a partition action can benefit from creative lawyering by those who are familiar with the different options for resolving real estate disputes. The best Newport Beach Partition Lawyer will be able to share information on this process with you.

What Are the Steps in a Partition Action?

Broadly, a partition action has only relatively simple steps. First, a party files a lawsuit to establish their rights to the property and desire to sell the property. Second, the court determines that the property should be sold, and appoints an appraiser to appraise the property and offer the other owner the opportunity to buy out the interest. Third, if the other fails to do so, then the Court appoints a “partition referee” (who is frequently a licensed Realtor) to sell the property, and they market and sell the property and deposits the proceeds into a trust account. Fourth, the court determines how much each party should receive from the proceeds, which should include addressing offsets and claims for contribution in an “accounting.” A top Newport Beach Partition lawyer will be familiar with the process.

Can You Recover Your 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 Newport Beach Partition Attorney will be able to give you good advice on these issues.

What Are Claims for “Contribution”?

Under the law, a property owner can make a claim for contribution for anything that they have expended for the common benefit of all the parties as it relates to their jointly-owned property. Code of Civil Procedure section 874.410 states that “the court may, in all cases, order allowance, accounting, contribution, or other compensatory adjustment among the parties according to the principles of equity.” For example, the credits can include expenditure in excess of the co-tenants fractional share for necessary repairs and improvements that enhance the value of the property. (Wallace v. Daley (1990) 220 Cal.App.3d 1028, 1035-1036.) Similarly, payments for interest, taxes, and insurance made by any co-tenant could be the subject of a reimbursement claim. (Hunterv. Schultz (1966) 240 Cal.App.2d 24.) An experienced Newport Beach Partition Attorney will be intimately familiar with these matters.

A Partition Case Study: Sandore v. Ferguson

Generally, the law favors partition in kind, and absent contrary evidence, there is a prevailing presumption in favor of a physical division of jointly owned property. However, if the sale of co-owned property and division of the proceeds is more equitable, then the court shall order the sale of the property. (CCP § 872.820(b).) In many modern transactions, the Law Revision Commission proposed a change to the law, explaining that in many modern transactions, a partition by sale is preferable because the value of property divided into parcels will typically not equal the value of the whole property before division. Moreover, a physical division may be impracticable or impossible due to zoning restrictions. The following paragraphs discuss how the court determines whether property should be divided physically or by sale in Sandore v. Ferguson (2007) 2007 WL 3138615.

In Sandore, Soony Sandore brought an action against Craig Ferguson seeking to partition commercial property that the Parties jointly owned. Sandore also sued for ouster and breach of contract. Prior to bringing suit, Sandore’s husband and her husband’s business partner leased their commercial property to the Fergusons who did business as the Ferguson Auto Center. The lease provided that rent was $7,800 per month for the first year, $9,000 per month the second year, with cost of living increases every year after that. When the second year came, the monthly rent increased to $9,000, however Ferguson continued paying $7,800, which was accepted. Four years later, the parties agreed to a lease addendum where rent was reduced to $5,000 per month for the year, then increasing to $7,800 for the next five years, and the lease renewal would expire after that. However, Ferguson continued to pay $5,000 per month for two years, and eventually $5,500 per month which Ferguson alleged that Sandore’s husband verbally agreed to. Years later, Ferguson continued to pay the monthly rent and eventually purchased Sandore’s business partner’s one-half interest in the property. Ferguson then continued to pay half of $5,500 per month for rent to Sandore’s husband.

Sandore sent Ferguson a letter accusing him of underpaying rent on the property under the lease terms. Sandore’s husband then sent Ferguson two letters stating that he was unable to pay attention to the lease because of his ongoing health problems. Sandore then warned Ferguson that if he failed to deliver concurrent possession of the property within 60 days, she would deem his failure an ouster. This action was the result of Ferguson’s failure to do so. At trial, instead of contesting the partition, the Fergusons sought a partition by physical division of the property, rather than a sale and division of the proceeds. The Fergusons called an engineer who testified how the property could be separated by building a wall down the middle of the building, and believed that city approval could be obtained and construction would only take a few months. However, he noted that the Fergusons would be at the mercy of the building department.

The trial court ruled in favor of Sandore for her ouster claim but ruled against her on the breach of contract claim, reasoning that the parties clearly operated with the understanding that rent was $5,500 per month. As to the partition claim, the Fergusons’ attorney asked the trial court for an interlocutory judgment ordering the property to be physically partitioned, with the court retaining jurisdiction to order a sale of the physical partition proved to be unattainable. The trial court was reluctant to issue an open-ended interlocutory judgment, and pressed for a time estimate for the physical partition. The Fergusons requested six months and explained that the city “commented favorably” to their partition request. The trial court issued the interlocutory judgment.

At a later hearing, the trial court requested an update on the plan to which the Fergusons stated that the engineer was proceeding with city relative to filing the approved plan. At another hearing, Sandore’s counsel submitted a declaration stating that the city informed him that an application for a permit to divide the property was never submitted. The Fergusons’ counsel stated that the city rejected the division proposal because the plans lacked drainage details and that the plans were still with civil engineering. The trial court ordered the parties back at a later date for an update on the partition plans and noted that the interlocutory judgment might have to be reevaluated if the plans were not working. During that hearing, the city’s planning division manager declared that no one had filed an application for the division and that there was almost no chance that the city would approve such a division. The trial court then reopened the trial.

At trial, the city’s planning division manager testified that the planning department would not approve the application for the division, and that although the city could approve the project despite the planning department’s disapproval, the city followed the planning department’s recommendations 90-95% of the time. Ferguson testified that he did not submit the application for financial reasons but had consultants who could file the application the next morning. The trial court ordered the property to be partitioned by private sale and appointed a referee. Ferguson appealed.

On appeal, the California Fourth District Court of Appeal affirmed the trial court’s judgment, determining that the trial court did not abuse its discretion when, after first ordering partition in kind, it ordered the partition by sale. The Court of Appeal held that “determining whether partition by sale would be more equitable than physical division is a factual question for the trial court, and we will not disturb that determination on appeal where the evidence, even though conflicting, permits the court reasonably to conclude the partition by sale would be more equitable.” (Romanchek v. Romanchek (1967) 248 Cal.App.2d 337, 344.) The Court of Appeal reasoned that Sandore had produced substantial evidence supporting the trial court’s determination, including the city planning division manager’s testimony and the lack of progress the Fergusons had made with filing the application for the division. Further, the Court of Appeal found that at all of the prior hearings, the trial court had repeatedly urged the parties to move forward with the partition quickly and stated that it would reevaluate the interlocutory judgment if progress was not made. As such, the Court of Appeal agreed with the trial court’s ruling that the property be partitioned by sale.

How the Underwood Law Firm Can Help

How a court determines what method of partition is equitable really comes down to the facts and circumstances of a case. Depending on the type of property, the court may determine that a partition in kind is impracticable due to the value of the proposed parcels, or zoning restrictions.

As there are various factors that play a role in the court’s determination for the method of partition, you may benefit from good legal advice on the topic if you are considering partition. If you find yourself contemplating a partition action, or faced with defending one, then please contact Underwood Law Firm, P.C. for an initial consultation.

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