What Happens When a Co-Owner Wants to Sell

The right of one owner to sell real estate owned with partners is nearly absolute under California law. It does not even require a majority of the partners to agree to sell. As long as one owner wants to sell and that owner files a partition lawsuit, the real estate could be sold. Often times when a disagreement arises one co-owner will say “You can’t make me sell.” However, California law does not support that statement. In fact, under California law any partner in real estate can force a sale using a partition action.

Partners who own real estate generally either own it as joint tenants or tenants in common. Under both types of real estate ownership, the right of partition is nearly absolute. If one partner refuses to sell or purchase the other partner’s share of the real estate, often times the only option will be to file a partition lawsuit. Often times prior to filing a lawsuit, the parties can agree to settle or mediate their dispute.

Starting a Partition Action

The requirements of a partition action can be found in California Code of Civil Procedure Section 872.020, et seq. When filing the Complaint, the party must also record a Notice of Lis Pendens on the property. After a Complaint is served on the defendants, the defendants must then respond. Generally, a complaint, in addition to seeking to force the sale of the real estate in question, can also seek damages for expenses incurred by the partner in the property. For example, if one partner in real estate has paid for property taxes, repairs, or maintenance he can be reimbursed for those expenses.

Referees, Appraisals, and Moving Forward

Depending on the hostility among the parties, a referee can be selected to handle various issues that will arise during the partition action. The referee is a neutral with quasi-judicial responsibilities and duties. A referee can be used to collect rents, handle the day-to-day maintenance of the real estate, and supervise the sale process.

Once a property is sold (and just to get to this point can take considerable time), Code of Civil Procedure Section 873.020 requires the proceeds from the sale be used for (1) expenses for the sale; (2) other costs for partition; (3) liens in order of priority; and (4) distribution of each partner’s share.

A partition action can be time consuming and expensive. Often times these matters can be resolved using a settlement agreement that could either require a sale to a third party or a buy-out by one partner. If you own real estate and would like to know your rights or are facing a dispute with partners over real estate you own, please contact Attorney Anthony Marinaccio at (818) 839-5220.