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San Jose Partition Lawyers

San Jose Partition LawyersThe city of San Jose, located in Santa Clara County at the southern edge of the San Francisco Bay, is best known for being the capital of Silicon Valley and boasting many top tech and financial companies. As an expensive city, San Jose has seen a rise in its real estate markets with rising property values, both commercially and residentially. Unfortunately, a San Jose Partition Lawyer will tell you that increases in property values may lead to arguments between co-owners of said property.

When property values increase, sometimes one owner may think it would be beneficial to sell the property and make a profit, while another owner may want to hold onto the land and test the market. When joint owners cannot agree on the future direction of their shared investments, then a co-owner of jointly owned real estate may benefit from meeting with a San Jose Partition Lawyer.

Frequently, there are at least four common types of partitions actions for which a San Jose Partition Attorney can provide sound counsel:

  • Investor-Investor shared ownership of property;
  • Boyfriend-Girlfriend share ownership of property;
  • Brother-Sister shared ownership of property; and
  • Parent-child shared ownership of property
What Is a Partition Action?

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.

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. Virtually universally, the instances in which a court has found a valid waiver have 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.

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. (Hunterv. Schultz (1966) 240 Cal.App.2d 24.)

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.

A Partition Case Study: Khouri v. Khouri

In a partition action, a party may seek costs, including attorney fees. Generally, the costs of partition include: (a) reasonable attorney’s fees incurred or paid by a party for the common benefit, (b) the fee and expenses of the referee, (c) the compensation provided by contract for services of a surveyor or other person employed by the referee in the action, (d) the reasonable costs of a title report procured pursuant to section 872.220 with interest thereon at the legal rate from the time of payment or, if paid before commencement of the action, from the time of commencement of the action, and (e) other disbursements or expenses determined by the court to have been incurred or paid for the common benefit.” (CCP § 874.010.)

Sometimes, a party may act frivolously and in bad faith throughout the litigation. A consequence of pursuing meritless arguments is a court’s determination that it is equitable to order that party to pay for the other party’s attorney fees and costs incurred due to the prolonged or unnecessary litigation. An aggrieved party may move for the equitable apportionment of attorney fees.

Code of Civil Procedure sections 874.010 and 874.040 provide various avenues for courts to determine the proper equitable apportionment if fees are incurred for purposes that unnecessarily exacerbate a dispute or do not provide a common benefit to the parties. To avoid these problems and move the litigation process along in an efficient manner, a partition lawyer can be of great assistance.

What Led This Case to the Court of Appeal?

Khouri v. Khouri, 2018 Cal.App.Unpub LEXIS 6394 is a great example of what can happen when a party acts in bad faith throughout litigation and pursues meritless arguments. A court may order that party to pay the fees incurred by advocating for a position of limited merit as those fees are not for the common benefit.

In Khouri, Shadia Khouri sought to quiet title and partition the Property that she shared with her sister, Suhair Khouri. (Id. at 1.) The trial court determined that the sisters owned the Property as tenants in common, each with an undivided 50% interest. The trial court also ordered the Property to be partitioned by sale and that each sibling would pay 50% of the partition costs. Further, the trial court determined that Suhair would pay the reasonable expenses, including attorney fees and costs, incurred by Shadia as a result of Suhair’s bad faith and frivolous opposition to her sister’s complaint.

After trial, Shadia submitted a bill seeking reimbursement for attorney fees and costs and other expenses related to the litigation totaling $77,730.34. The court entered a judgment for this amount. Suhair appealed. The Court of Appeal affirmed the judgment and costs award and remanded to the trial court to conduct further proceedings to address the parties’ motions for equitable apportionment of attorney fees. (Id. at 27.)

Khouri’s Holding: Acting in Bad Faith in a Partition Action Has Its Consequences.

This case is demonstrative of a court’s power to make equitable apportionment of costs and fees in partition actions. Partition actions are equitable in nature; thus, courts make equitable considerations.

The Court of Appeal found that Suhair illegally and fraudulently charged and received Section 8 rent payments without offering to share them with Shadia or attributing the funds to the family’s common fund. Further, the Appellate Court determined that there was little to no evidence that Suhair contributed any of her own money towards the Property despite her claim that she was the only one contributing. As such, the Appellate Court agreed with the trial court in determining that Suhair acted with bad faith, unclean hands, and lacked credibility. (Id. at 22.)

Further, Suhair attempted to submit accountings late and attempted to produce the accountings at trial without first sharing it with Shadia or her counsel despite prior request for that information from the outset of litigation. (Id. at 23.) The Appellate Court held that “this type of trial strategy, using surprise and gamesmanship, undermines the purpose of civil discovery procedures.” (Juarez v. Boy Scouts of America, Inc. (2000) 81 Cal.App.4th 377, 388-389.) Instead of good faith litigation, Suhair acted in a way that “caused the proceedings to be significantly and unnecessarily protracted and expensive.” (Khouri, 2018 Cal.App.Unpub LEXIS 6394 at *23.)

The Appellate Court determined that there was ample support for the trial court’s apportionment of costs to Suhair as her deposition and trial testimony were inconsistent, especially on material issues. Suhair also backdated letters purporting to request contributions from her sister. She acted in a way that needlessly, significantly, and unreasonably prolonged the litigation. She refused to provide timely accounting and verified discovery responses. For these reasons, the Appellate Court held that Suhair’s arguments lacked merit and there was substantial evidence to support the trial court’s determination of the amount for equitable apportionment.

Khouri is thus instructive in providing the standards courts use in equitably apportioning attorney fees when a party acts in bad faith and unnecessarily prolongs the partition proceedings. Indeed, litigation may lead to further disputes and feelings of hostility or anger. Litigation may bring out the worse in some litigants when tensions and emotions are heightened or there is a lot to be lost. However, as shown, it is important to act in good faith when it comes to litigation so as to avoid further issues.

Although partition actions are governed by statute, “it is nonetheless an equitable proceeding.” (Cummings v. Dessel (2017) 13 Cal.App.5th 589, 597.) Thus, in partition suits, the court may order allowance, accounting, contribution, or other compensatory adjustment in accordance with the principles of equity. (CCP § 872.140.)

How Underwood Law Firm Can Help.

Getting a judgment of partition is often only the first step in partition litigation. Perhaps unsurprisingly, getting the property sold can take even longer than litigating the right to partition itself. The nature of the lawsuit becomes that of an accounting, as parties attempt to find common ground on the methods and costs of the partition itself.

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.

The Underwood Law Firm serves all neighborhoods in San Jose, including the Alameda, Almaden Valley, Alum Rock, Alviso, Berryessa, Blossom Valley, Buena Vista, Burbank, Calero, Cambrian, Chinatown, Communications Hill, Coyote Valley, Downtown, East Foothills, East San Jose, Edenvale, Evergreen, Japantown, and more!

Learn more here.

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