PARTITION BY SALE – THE FIRST BATTLE
In a partition action, there are two parties generally. One party who wishes to sell the the co-owned property, and one unwilling party. The burden of proof is on the plaintiff files the partition action to force the sale of the property.
The first thing that owner must establish is that the property is not suitable for partition in kind. Partition in kind is an actual physical division of the property as opposed to selling 100% of the property and dividing the proceeds equitably. A good example would be rural property with tremendous acreage. In that circumstance a ranch that has 1600 acres might be suitable to be partitioned in kind with each co-owner taking 800 acres. But in the modern context, a single commercial building or single-family residential property is not suitable for partition in kind.
PARTITION BY APPRAISAL – A COMPROMISE
In some circumstances, the two co-owners may agree that the party needs to be sold but however disagrees as to listing price. Also, this is the common scenario where one party wishes to buy out the other and the only dispute is really the price. In that circumstance, assuming that there is no dispute as to the proportion of their ownership interest, the partition can be accomplished by appraisal. In that circumstance one party can buy out the other for the appraised price under certain terms and conditions, and subject to court order. [California Code of Civil Procedure §873.910]
In that circumstance, the parties will file a stipulation with the clerk which contains the following:
(a) A description of the property.
(b) The names of the parties and their interests.
(c) The names of the parties who are willing to acquire the interests.
(d) The name or names of a person or persons to whose appointment as referee or referees the parties consent.
(e) The date or dates as of which the interests to be acquired are to be appraised.
(f) Other terms mutually agreed upon which may include, but are not limited to, provisions relating to abandonment of the action if the appraised value of the interest to be acquired exceeds a stated amount, required deposits on account of purchase price, terms of any credit, title and objections to title, and payment of the expenses of the procedure authorized by this chapter and of costs of the action.
Practice tip There are very few defenses to a partition action. Short of an actual dispute as to the plaintiff actually having an ownership or in the circumstance where the parties have agreed to waive partition, the sale will be approved. Accordingly, the most economical approach for litigants is to stipulate to the terms and conditions of the sale and referee appointment they can live with and have the Court impose any remaining conditions to the sale.