Sacramento Partition Lawyers
Sacramento is the capital of the State of California, and the largest city in the Central Valley. Sacramento is home to the National Basketball Association's Kings, the United Soccer League's Republic FC, and San Francisco Giant's Minor League Baseball AAA affiliate, the Sacramento Rivercats. Sacramento is also home to California State University, Sacramento, and the University of California campus at Davis, California. Like many places throughout California, many Sacramento residents find themselves needing to move from a chaotic real estate situation to a fresh start with the equity from the property.
Generally, the best Sacramento Partition Lawyers usually find partition action to be the best remedy for disputing co-owners in four broad categories:
- Family real estate where only one party wants to sell;
- Former romantic partners' real estate where only one party wants to sell;
- Jointly Owned real estate where only one party wants to sell;
- Partnership real estate where only one party wants to sell;
A partition action is a judicially-supervised forced sale of real estate. In California, each co-owner has an "absolute" right to partition the property. "Ordinarily, if the party seeking partition is shown to be a tenant in common, and as such entitled to the possession of the land sought to be partitioned, the right to partition is absolute, and cannot be denied, 'either because of any supposed difficulty, nor on the suggestion that the interest of the co-tenants will be promoted by refusing the application nor temporarily postponing the action." ( Priddel v. Shankie (1945) 69 Cal.App.2d 319, 325 (emphasis added).) Thus, any owner of real estate (whether 5%, 50%, or 95%) has the right to bring a partition action in California.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 a "partition referee" (who is frequently a licensed Realtor) to sell the property. Third, the partition referee markets and sells 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."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. (Hunter v. Schultz (1966) 240 Cal.App.2d 24.) Similarly,Can a Partition Action be settled through mediation or negotiation?
A partition action can always be resolved informally at any time prior to the first day of trial. 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.Are legal costs recoverable in a partition action?
Code of Civil Procedure section 874.010 states that "the costs of partition include (a) [r]easonable attorney's fees incurred or paid by a party for the common benefit." Courts have found that the "purpose of the statute is to divide the costs of the legal services among the parties benefited by the result of the proceeding." (Stutz v. Davis (1981) 122 Cal.App.3d 1, 4.) Importantly, however, the availability of the recovery of these fees will depend on whether a party can show that the fees were sufficiently connected with the "common benefit." As such, it is valuable to have an experienced Sacramento Partition Lawyer assist with the process to ensure that the claims are made as strongly as possible.Aguilera v. Lyons - Why an Experienced Partition Lawyer can be invaluable
After a party finally secures a judgment of partition, the property itself must still be sold (or partitioned in another way). This raises a brand-new set of issues for litigants as they attempt to figure out the terms of sale, when the property should be sold, and most importantly, the asking price.
Usually, the parties at this stage of litigation come into some form of harmony. Because a sale is inevitable, the parties want to make sure they get the highest price possible. Doing so will allow them to more easily divide the proceeds in accordance with their ownership interests, contributions, and offsets.
Despite this fact, litigants can still be prone to squabbling at this stage even when it hurts their own pocketbooks. Fights break out over what partition referee to use, whether to allow credit bids, what marketing procedures ought to be allowed, and the like. To avoid these outcomes, and to move the sales process along in an efficient manner, an experienced partition lawyer can be of great assistance.What led this case to the Court of Appeal?
Aguilera v. Lyons , 2015 Cal.App.Unpub LEXIS 7258 is a cautionary tale on what can happen when the process is dragged out. In Aguilera, the Aguileras filed a partition action against multiple other co-owners to sell a lot of about 90 acres of unimproved land in Plumas County, California. (Id., at 1.) The case proceeded to a bench trial, where the court upheld the Aguileras' right to partition the land by sale and appointed a partition referee. (Id., at 2.)
Despite the order, the Aguilera's began causing issues. First, they tried to convince the court to allow a subdivision of the land, wasting years of time and money fighting the referee's sales efforts. (Id., at 4.) After abandoning the idea, the Aguileras' became particularly focused on the purchase price for the land, given that the housing market had not yet recovered from the 2008 crash. (Id., at 6.) Nonetheless, on account of the court order in place, the partition referee proceeded with their efforts to sell the lot. In 2011, almost eight years after the initial bench trial, the referee received an offer for the land totaling about $500,000. (Id., at 19.)
For the Aguilera's, the price was simply too low. In response to the Defendant's motion to confirm the sale, the Aguilera's filed their own motion to set the entire sale aside. (Id., at 22.) During the hearing on these motions, the Aguilera's tried to argue that they should be allowed to purchase the property with a credit bid. (Id., at 24-25.) Ultimately, the court denied the Aguileras' motion and confirmed the sale of the lot. (Id., at 35.)
Thereafter, the Aguilera's filed a motion for a brand-new trial, and for relief from the court's order under Code of Civil Procedure section 473. ( Id., at 39.) The trial court denied these motions and the Aguilera's appealed. On appeal, the appellate court confirmed all of the trial court's rulings. (Id.)Aguilera 's Holding: Fighting the Partition Sale is Often Fruitless.
This case is interesting because it delves into the aspects of the partition process that rarely get enough light: the sale of the property itself.
For one, a large part of litigation was whether the Aguileras were allowed to try and buy the property on "credit." A credit bid is a type of bid where one co-owner uses their credit they already have in the property to buy the whole thing. Here, because the Aguilera's were 60% percent owners of the lot, they would only have to put up 40% of the total purchase price, with their ownership interest already covering the rest.
The thing with credit sales is that because a third-party isn't making the purchase, there is less cash on hand. Thus, whatever owners aren't making the purchase have to usually take deferred payments in installments instead of a bulk disbursement from the property sale. In Aguilera, the court denied the Aguileras' attempt to submit a credit bid because of the above concern, also stating the important rule that bids made during a sale confirmation hearing (often by one of the parties themselves) must exceed the current sales price by at least ten percent on the first $10,000, and five percent on the excess. (CCP § 873.740.)
Because the Aguilera's submitted a credit bid at the same purchase price, it was therefore invalid.
Another set of issues in Aguilera had to do with disclosures in the referee's notice of sale. The Aguileras argued that the notice of sale did not mention the purchase price. The trial and appellate court disagreed. No statutory authority expressly requires a sales price to be stated in the notice. (Cummings v. Dessel (2017) 13 Cal.App.5th 589, 600.)
Only once an offer is made and accepted will the price offered be set forth in the referee's report of sale and later motion to confirm the sale. (CCP § 873.710.) That way, the parties have the ability to try and go over the stated purchase price to buy the property for themselves. They have an offer to beat.
Yet another issue for the Aguileras was the referee's marketing efforts. When the court appoints a partition referee, the referee will typically be responsible for marketing the property. (CCP § 873.510.) How the referee markets the property is usually agreed-to by the parties before the effort begins, along with other critical information relating to how exactly the property will be sold. (Sullivan v. Dorsa (2005) 128 Cal.App.4th 947, 961.)
If the parties feel that the referee did not market the property well enough, they can file a motion to vacate the sale, as the Aguilera's did in this case. (CCP § 873.720.) A big part of the Aguilera's argument was that the referee did not put the lot on the MLS (Multiple Listing Service). But the court advised that a MLS listing is not the end-all be-all of adequate marketing efforts, especially for undeveloped land consisting largely of forestry.
Lastly, the Aguileras devoted much of their ire towards the sales price itself. In their eyes, $500,000 for 88 acres was simply too low of a price. Yet, the court of appeal pointed out that the Aguilera's never procured a third-party appraiser, and that the lack of subdivisions and undeveloped state of the property made the purchase price reasonable enough.
Aguilera is thus instructive in providing the standards court use in assessing a property's sales price. Often, parties have an idea in their head of what their property is worth. But their expectation and the market don't always align.
Parties are indeed entitled to fight a motion to confirm a sale on the grounds that the purchase price is too low. (CCP § 873.730.) But if they want to win that motion, they need proof (like a third-party appraisal) that the sales price is indeed disproportionate to the property's actual value. (Cheng v. Coastal L.B. Associates, LLC (2021) 69 Cal.App.5th 112, 121 [a trial court can be convinced that a sales price is erroneous].) Thus, it is valuable to have an experienced Sacramento Partition Lawyer to assist with the process.How the Underwood Law Firm, P.C. Can Help
As each case is unique, property owners would be well-served to seek experienced counsel familiar with the intricacies of partition actions and the sales procedures that follow. At Underwood Law, our knowledgeable attorneys are here to help. If you are trying to decide on the methods for a partition sale, attempting to fight another party's motion to confirm or vacate a sale, or if you just have questions, please do not hesitate to contact our office.