Suppose that you’ve inherited a piece of real property. Your financial situation could benefit from selling the property; however, the other co-owners of the property wish to keep it. What do you do? Can the other co-owners force you into remaining a co-owner, or is there a way for you to terminate your interest in the property?
The good news is that unless an exception applies, a co-owner cannot be forced to remain a co-owner if that is not what they want. If the other co-owners are unwilling to sell or buy out your interest in a property for a price acceptable to you, forcing the sale of jointly owned property through a type of lawsuit known as a partition action is a viable option.
Jim Bush, Partner at Keystone Law Group, discusses the most important things to know about a partition. Read the complete article below for more details. Click the YouTube Channel subscribe button to be notified when new videos are published. Subscribe
When two or more co-owners cannot agree on how to best use or dispose of a piece of real property, they generally have a right to bring a type of lawsuit known as a partition action to the appropriate court.
By filing for partition of property , a co-owner may be able to terminate their interest in a piece of real property by forcing its sale and having the proceeds from the sale distributed equitably and fairly among the co-owners.
While it used to be challenging to successfully defend partition actions , doing so has become simpler for certain categories of people because of reforms made to California partition laws, which took effect January 1, 2022. We’ll discuss these changes in more detail throughout this article.
Partition actions can arise in the context of probate when there are disputes surrounding the disposal of a decedent’s real property that multiple beneficiaries have inherited together through an estate distribution or trust fund distribution.
If the beneficiaries do not wish to jointly own the property, and they cannot agree on how to divide up their interests in the property or on a fair price for a buyout, a partition action can be brought to force the sale of the property.
For example, when a will or trust leaves a real property to multiple beneficiaries, certain beneficiaries may wish to maintain their interests in the property, whereas other beneficiaries may wish to terminate their interests in the property through a sale. While the beneficiaries seeking to keep the property can try to buy out the other beneficiaries at a fair price, there is no guarantee that an agreement will be reached. If this is the case, the beneficiaries seeking to terminate their interests, so long as they have assumed ownership of the property, can bring a partition action to force the sale of the property.
As another example, if a decedent had owned only a percentage share of a piece of property (i.e., as a tenant in common ), their beneficiaries will inherit only their share of the property upon their death. If it is undesirable or illogical for the beneficiaries to jointly own the property with its other co-owners, they could try to either make a buyout agreement with them or convince them to sell the property. If the co-owners cannot agree on how to dispose of the property, the new owners could sue for partition of property and force its sale.
When an inherited real property has indications of familial ownership and was passed down to one or more co-owners from a relative (e.g., siblings are jointly in heriting a property that belonged to their parents ), then the property may be considered “heirs’ property” and be subject to different partitioning rules as a result of the aforementioned 2022 reforms to California partition laws. Namely, instead of the non-partitioning co-owners being forced into a sale, they will be given an opportunity to buy out the partitioning co-owners at a price that represents the value of their proportional interests in the property.
It should be noted, however, that if there is an agreement among co-owners governing the partition of property, the 2022 reforms may not be applicable, even if the property otherwise qualifies an heirs’ property.
