Riverside Partition Lawyers
Riverside is the county seat and largest city in Riverside County, only sixty miles east of Los Angeles, and received its name due to its location beside the Santa Ana River. The city is home to the World’s Largest Paper Cup, a giant concrete Dixie Cup. Riverside residents are susceptible to the same struggles when dealing with joint real estate owners as the rest of Californians – disagreement. It is not uncommon for joint tenants to disagree on what to do with their shared property, whether to keep or sell it, especially in today’s rising market. Fortunately, a Riverside Partition Attorney can tell you that the California Code of Civil Procedure allows a co-owner to escape these situations through the legal remedy of partition. There are at least four other scenarios where a Riverside Partition Lawyer can be helpful:
- Investor-Investor co-ownership of property;
- Boyfriend-Girlfriend co-ownership of property;
- Sibling-Sibling co-ownership of property; and
- Parent-Child co-ownership of property
A partition lawsuit requires real estate to be sold regardless of the requests of the other title owners. The purpose of a partition action is to permanently end all disputes and remove all obstacles to the free enjoyment of land by one person. (McGillivray v. Evans (1864) 27 Cal.92.) These types of actions can be brought for all types of real estate from houses to farms to office buildings to apartment buildings. Similarly, partition actions are available all types of ownership situations from joint tenants to tenants-in-common to partnership property to property jointly owned by former spouses.
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 Riverside Partition Lawyer will be able to share information on this process with you.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. A top Riverside Partition lawyer will be familiar with the process.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 Riverside Partition Attorney will be intimately familiar with these matters.Can You Mediate a Partition Action?
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 knowledgeable Riverside Partition Attorney will be able to give you good advice on these issues.A Partition Case Study: Akmakjian v. Haider (2010)
After a court has ordered a partition sale of real property, how does the court distribute the referee fees, commission, and other closing costs of conducting the sale? How much the court orders a party to pay may depend on the reasons provided by the referee in the referee’s final accounting as well as the court’s own discretion regarding what is equitable. The following paragraphs discuss how such circumstances affected the outcome of Akmakjian v. Haider (Cal. Ct. App., Dec. 3, 2010, No. E050146) 2010 WL 4913940.
In Akmakjian, Ms. Christina Akmakjian (the “Plaintiff”) brought action against Mohammed and Mary Haider (the “Defendants”) seeking to partition an apartment building. The trial court held that Ms. Akmakjian owned an 85 percent interest in an apartment building and that Mr. and Mrs. Haider owned the remaining 15 percent interest. The court then appointed a referee to manage the sale of the property and to perform a final accounting.
After the partition sale of the apartment building, the appointed referee moved for the trial court’s approval of the referee’s final accounting and plan for distribution of the proceeds. The referee proposed to credit the parties with income and proceeds from the sale in proportion to their respective interests in the property, eighty-five to fifteen (85-15). In addition, the referee also proposed charging the parties for the costs of conducting the partition sale itself on a fifty-fifty (50–50) basis.
In July 2009, Mr. and Mrs. Haider filed a motion to invalidate the partition sale and terminate the referee’s appointment on the claim that the referee committed “auction fraud.” They alleged that the referee’s proposals were biased. Mr. and Mrs. Haider also contended that allocating income from the sale of the property differently than the expenses arising from the referee fees, commission, and other closing costs of conducting the sale was incorrect and inequitable.
In September 2009, the referee filed a motion for an order approving his final accounting and proposed distribution to the parties, including the allocation of expenses on a fifty-fifty basis. At the hearing on this motion, the referee's counsel gave no explanation for the referee's allocation of costs, instead stating that the issue was “really a matter between the defendant[s] and plaintiff.” The Defendants opposed the motion. Plaintiff Akmakjian’s counsel objected to the Mr. and Mrs. Haider’s opposition as untimely but did not offer a reasoned justification for the differing treatment of income and expenses.
The trial court subsequently rejected the Mr. and Mrs. Haider’ arguments and granted the referee’s motion for an order approving the final accounting and proposed distribution. The trial court’s order included the referee’s proposal for charging the parties for the costs of conducting the partition sale on a fifty-fifty basis. The trial court granted the motion without providing reasoning that addressed Mr. and Mrs. Haider’s arguments. Mr. and Mrs. Haider then appealed.
On appeal, the California Fourth District Court of Appeal agreed with Mr. and Mrs. Haider. The Court held that the law requires the costs of partition to be apportioned according to each parties' interest in the partitioned property. The Court reasoned that although a trial court has discretion to depart from this rule when doing so is “equitable,” such discretion must be supported by substantial evidence in the record.
In reaching its holding, the Court of Appeal cited California Code of Civil Procedure Section 874.010, which defines the costs of partition to include (a) reasonable attorney fees incurred for the common benefit; (b) the referee's fee and expenses; and (c) certain other specified costs and disbursements incurred for the common benefit. The Court also cited Section 874.040, which provides, “Except as otherwise provided in this article, the court shall apportion the costs of partition among the parties in proportion to their interests or make such other apportionment as may be equitable.”
Moreover, the Court of Appeal referenced clear legal precedent supporting its holding. Under these rules, “a trial court ordinarily should apportion the fees and costs based on the parties' proportion of interest in the property, making the equitable apportionment option the exception rather than the rule.” (Finney v. Gomez (2003) 111 Cal.App.4th 527, 546, citing Stutz v. Davis (1981) 122 Cal.App.3d 1, 4.).
In the Court of Appeal’s view, the referee's accounting in the present case was irreconcilable with the general rule under section 874.040. The referee expressly allocated costs equally between the parties, even though the Plaintiff's and the Defendants' interests were 85 percent and 15 percent, respectively. For the trial court to properly approve the referee's accounting, the Court of Appeal reasoned that the approval must be based on the final clause of the statute, which permits the trial court to “make such other apportionment as may be equitable.” (§ 874.040.)
Additionally, the Court of Appeal reasoned that because Ms. Akmakjian had failed to provide substantial evidence to support a departure from the ordinary rule that costs in a partition action be apportioned according to each parties' interest in the property, the trial court had erred in approving the referee's final report. The error was clearly prejudicial because under the referee's accounting, the sum of costs to be split 50–50 would be $166,800.20 and each party would be charged $83,400.10. In contrast, if these costs had been apportioned in proportion to the parties' interests, Mr. and Mrs. Haider would be charged with only 15 percent of the costs, or $25,020.03, whereas Ms. Akmakjian would be charged with 85 percent of the costs, or $141,780.17. Thus, the Defendants would be overcharged by $58,380.07 and plaintiff undercharged by the same amount absent modification of the trial court’s order.
The California Fourth District Court of Appeal ordered that the trial court’s order be modified to require the apportionment of costs in proportion to the parties' interests in the property (85-15). The Court of Appeal then affirmed this order as modified.How the Underwood Law Firm Can Help
How a court decides to distribute the referee fees, commission, and other closing costs associated with conducting a partition by sale can depend on the consideration of various factors, such as the reasons provided by the referee in the referee’s final accounting as well as the court’s own discretion regarding what is equitable.
As there are many different ways to waive the right of partition, and you are considering it as an option, then you may benefit from good legal advice on the topic. 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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