Whenever real property is owned by two or more individuals (who are not married), the question sometimes presents itself: “I don’t want to own this property anymore, or I don’t want to own this property with a certain individual - What do I do?”
There are a few obvious simple options to try first. Initially, the easiest option is for the property owners to agree to market and sell the property to another individual and divide the proceeds. The property owners may also agree to a buyout, in which one of the owners would purchase another owner’s interest in the property. This option is particularly desirable if one owner wishes to keep the property and is financially able to affect a buyout. A third option is for an owner to sell and/or transfer their interest in the property to another individual. In reality, this option is very unlikely to succeed as individuals rarely are willing to purchase a partial interest in real property and enter into a co-ownership relationship with an unknown individual.
So what happens when none of these simple options work, and a co-owner is unwilling to cooperate? This is when the law of partition becomes relevant. In California, owners of real property have a right, as a matter of law, to partition of real property. Partition is a legal action to divide the interest of the real property owners “in kind” or “by sale.”
- In kind division refers to a physical division of the property. If reasonably possible, Courts prefer to divide property in kind. In kind division will likely be employed if the parties own large tracts of land or multiple properties. If in kind division is ordered by the Court, a Court appointed referee will evaluate the property and determine how the property will be physically divided. If the property cannot be divided in an equal manner, the referee may order one party to compensate the other for said inequality.
- By sale refers to a division of the property by means of a sale and division of the sale proceeds. By sale division is typically employed when the parties own a residential dwelling or other building that cannot be feasibly divided. If by sale division is ordered, a referee appointed by the Court will market and sell the property. The sale proceeds will then be divided amongst the owners in accordance with their proportional ownership share.
If you are considering a partition action or have been served with a partition lawsuit, it is in the parties’ best interest to immediately attempt to resolve the matter, as the expenses associated with partition are high.
If you have any questions about any of these issues or other property related questions, contact an attorney at Corren & Corren to discuss.