Silicon Valley Partition Lawyers
Silicon Valley is located in the Southern Part of Northern California’s Bay Area, and is located almost entirely within the Santa Clara Valley. As of June 2021, Silicon Valley has the third-highest GDP per capita in the world, and the highest percentage of homes valued at $1 million or more in the United States. Silicon Valley is the home to Adobe in San Jose, Oracle in Redwood City, Yahoo in Sunnyvale, Cisco in the Golden Triangle, and Paypal in San Jose. As of 2021, Silicon Valley employed about half a million information technology workers. Silicon Valley has a severe housing shortage, caused by the huge imbalance between jobs created and housing built. For example, there are 400,000 jobs created for only 60,000 housing units per year. This housing shortage can lead to joint ownership problems. Silicon Valley Partition Lawyers often find that joint ownership problems fall into four categories:
- Family owned real estate where only one party wants to sell;
- Former romantic partners who jointly own 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 an action brought by a co-owner of a piece of real property against another co-owner, seeking to divide the property according to the respective interests of the co-owners. In order to establish a right to a partition, a party must show that they have some ownership interest in the subject property. Under Code of Civil Procedure section 872.210, any owner of an estate of inheritance, an estate for life, or an estate for years in real property where such property or estate is owned by several persons concurrently or in successive estates may bring a partition action. (CCP § 872.210.) Therefore, a co-tenant has an absolute right to partition. ( Formosa Corp. v. Rogers (1951), 108 Cal.App.2d 397.) At the Underwood Law Firm, our attorneys are more than familiar with partition actions and the step-by-step process of pursuing a partition.
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. The best Silicon Valley Partition Lawyer will be able to share information on this process with you.What Are the Steps in a Partition Action?
First, a partition action is filed. A partition action can be filed if one co-owner of real property or a piece of real estate wishes to sell the property or piece of real estate in question but the other co-owners or co-tenants do not wish to sell their ownership rights.
Second, the court may appoint a court referee to oversee the sale of the property in question. The sales procedure includes that all parties agree to the terms and conditions of the sale in writing. If the parties can not agree, as partition actions are usually very contested issues, then the referee that the court appointed may recommend terms and conditions to the court. Then the court will hold a hearing to decide whether or not to accept those terms and conditions.
Third, in California, the property’s value will be appraised via a third party or another property appraisal with no ties to any of the parties. While this is not required in all states, it is recommended to make sure that all parties are on the same metaphorical page as to the potential sale proceeds of the property in question.
Fourth, the referee will conduct the sale in the method most agreeable to all of the party’s goals. This can be via a public auction or a private sale. Regardless of the specific method of partition by sale, the court will determine if the sale was “fair.” If it is decided that the property’s sale proceeds had a lack of proper notice, the sale amount is not within reasonable the value of the property, or if the proceeds were unfair- the court would rule that the property will be up for sale again.
Lastly, the court will order that the proceeds of the sale, minus any court litigated or approved offsets or costs, will be distributed equitably amongst all of the co-owners or people with interest in the property. A top Silicon Valley Partition lawyer will be familiar with the process.Can You Recover Your Attorneys’ Fees in a Partition Action?
Code of Civil Procedure, section 874.010 states that “[t]he costs of partition include: (a) [r]easonable attorney’s fees incurred or paid by a party for the common benefit.”
Interestingly, the costs of partition can also include reasonable expenses necessarily incurred by a party for the common benefit in prosecuting or defending other actions or proceedings for the protection, confirmation, or perfection of title, setting the boundaries, or making a survey of the property. (CCP § 874.020.)
That attorney’s fees are considered “costs” associated with a partition action is important because Section 874.040 goes on to state 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.” A knowledgeable Silicon Valley Partition Attorney will be able to give you good advice on these issues.What Are Claims for “Contribution”?
Before the sales proceeds are distributed among the parties, a court-ordered accounting will determine the charges and credits upon each co-owner’s interest. These credits are taken out of the net proceeds before the balance is divided equally. ( Southern Adjustment Bureau, Inc. v. Nelson (1964) 230 Cal.App.2d 539 (“Nelson”).)
“When a cotenant makes advances from his own pocket to preserve the common estate, his investment in the property increases by the entire amount advanced. Upon sale of the estate, he is entitled to his reimbursement before the balance is equally divided.” ( Nelson , 230 Cal.App.2d, at p. 541, citing William v. Koyer (1914) 168 Cal.369.)
As such, a party to a partition action must produce and gather their evidence and make sure that it is presented to the court so they can receive full credit for the value that they have added to the property. While a party may have a right to these credits under the law, ultimately, they will not be counted unless they can be presented in the proper form. An experienced Silicon Valley Partition Attorney will be intimately familiar with these matters.A Partition Case Study: Loubar, LLC v. U.S. Bank, N.A. (2016)
An action of partition is equitable in nature, with a goal to permanently put an end to all property disputes and to remove any obstructions to its free enjoyment. Partition proceedings involve the segregation and termination of common interests in the same piece of property, such that further litigation shall not arise. Before a partition can take place, the interests of all the parties must be ascertained and settled by a trial. The following paragraphs discuss Loubar, LLC v. U.S. Bank, N.A. (2016) 2016 WL 4939566, a case demonstrating the importance of naming a party as a defendant and the effect of a stipulated order.
In Loubar , Plaintiff Loubar (“Loubar”), LLC sued Defendant U.S. Bank (the “Bank”) and six non-bank defendants in 2011, seeking to challenge the validity of allegedly sham leases and the Bank’s deed of trust encumbering property that Loubar had acquired after a court-supervised sale. Prior to this suit in 2008, Loubar’s predecessors in interest sought to partition their and their family members’ undivided interests in the property. That suit was resolved by an auction in which Loubar’s predecessors were the successful bidders and purchased the property “subject to all leases, easements and other exceptions affecting the Property referenced on the Title Report, and all encumbrances of record.”
After Loubar brought this suit in 2011, the Bank demurred and filed a motion for a judgment on the pleadings on the ground that Loubar’s predecessors failed to challenge the allegedly sham leases and the Bank’s deed of trust in the 2008 action. The trial court agreed with the Bank’s argument that as a result of Loubar’s predecessors’ failure to challenge the allegedly sham leases and the Bank’s deed of trust in the prior action, under the applicable partition statutes, Loubar was now barred from contesting the Bank’s deed of trust in this action.
Loubar appealed, contending among other things that the trial court erred in ruling that the Bank was an indispensable party to the 2008 partition action, in concluding that the “subject to” condition in the terms of sale to which it stipulated forever ratified the validity of the leases, and in failing to realize that Loubar’s predecessors lacked standing to challenge the leases of the Bank’s deed of trust in the 2008 action.
The California Sixth District Court of Appeal affirmed, holding that the trial court could have properly determined under § 389 that the Bank’s joinder was required in the 2008 action. In line with the policy of “achieving finality and a conclusive end to disputes about property and removing obstructions to its free enjoyment,” the trial court was authorized under the partition statutes to decide all issues related to the leases and the Bank’s deed of trust in the 2008 partition action. Because the adjudication of those issues in the Bank’s absence would have impaired or impeded the Bank’s ability to protect its own interests, the Court of Appeal held that if Loubar’s predecessors wanted to challenge the leases and the Bank’s deed of trust, the predecessors should have joined the Bank as a defendant and raised those challenges in the 2008 action. (CCP § 389.)
However, the Court of Appeal determined that the trial court did not even need to analyze under § 389, as the parties had previously stipulated upon the terms of sale that protected the lessees’ and the Bank’s interests. The Court of Appeal reasoned that in the stipulated order, it is undisputed that the leases and the Bank’s deed of trust were indeed referenced on the Title Report and the purchase was controlled by the terms of the order.
The Court of Appeal disagreed with Loubar’s contention that the purpose of the language in the terms of sale was only to put the auction participants on notice of the existence of such leases and exceptions and encumbrances on record in order to negate a non-disclosure claim down the road. The Court held that the parties had stipulated to the entry of a court order establishing the terms and conditions of a partition sale. As such, the parties had consented to the order. The Court of Appeal held that Loubar could not now collaterally attack those orders because the stipulated order was incorporated into the order confirming the partition sale.
Here, Loubar’s predecessors had knowledge of the leases and the Bank’s deed of trust at the time of the purchase, and their winning bid acknowledged their agreement to take title subject to all encumbrances of record. Further, the trial court was authorized under the partition statutes to make a provision in the stipulated order to protect the recorded interests. Thus, Loubar’s predecessor’s failure to challenge the leases and the Bank’s deed of trust, and their express stipulation to purchase the property subject to those encumbrances bar Loubar from making those challenges as those challenges have been waived. ( Balkins v. County of Los Angeles (1947) 81 Cal.App.2d 42, 48.)
The Court of Appeal further held that Loubar’s predecessors had standing, contrary to Loubar’s contention that they lacked standing, finding that since the predecessors were owners of estates of inheritance, they thus had standing to commence and maintain the 2008 partition action. (CCP § 872.210, subd. (a)(2).) Also consistent with the policies relating to partition, “the permissible scope of a partition action is broad, in keeping with the statute’s underlying policy to permanently end all disputes about the property and to remove all obstructions to its free enjoyment.” (CCP § 872.610; see LEG Investments v. Boxler (2010) 183 Cal.App.4th 484, 497.)
Because the defendants in the 2008 partition action expressly identified the leases and the Bank’s deed of trust in their answer, where they prayed that the property be sold subject to the encumbrances of record, the Court of Appeal found that “it would be anomalous to hold that the defendants in a partition action could raise these issues but that Loubar’s predecessors lacked standing to respond to them or to raise related issues.” Thus, the Court of Appeal rejected Loubar’s contention that Loubar’s predecessors lacked standing to raise challenges to the leases and deed of trust in the 2008 action.How the Underwood Law Firm Can Help
As we’ve seen, the judicial process favors the policies surrounding the equitable nature of partition actions. The failure of adding an indispensable party may have unfavorable effects and may potentially shape the outcome of future litigation.
Because there are many different factors and decisions to make during the litigation process, 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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