THE 2023 PARTITION OF REAL PROPERTY ACT
In January 2023, the legislature enacted the Partition of Real Property Act (“PRPA”) replacing the Uniform Partition of Heirs Property Act (“UPHPA”) which was adopted by California two years earlier.[1] The goal of the UPHPA was to protect co-tenants’ interests in “heirs property” (land that was inherited). The PRPA removes the requirement that the subject property be “heirs property” granting protections to all co-owners holding title as tenants in common without a partition agreement in place.
Absent an agreement, co-tenants had very broad powers to bring a partition action to force the division (partition in kind) or sale (partition by sale) of the jointly owned property. According to some, this rendered tenancy in common “a very unstable form of property ownership.”[2]
The goal of the UPHPA was to balance the interest of one co-owner desiring to sell their share in property against other co-owners that wanted to keep property or avoid owning with unknown third parties. The UPHPA provided specific procedures for the division of property where at least one co-tenant obtained title from a relative and the parties did not have a partition agreement. With the passage of the PRPA, all co-owners can enjoy these benefits.
The PRPA has a detailed process for partition actions filed after January 2023. Some of the key features include: (1) appraisal of the property by a neutral third-party; (2) a co-owner’s right of first refusal, (3) benchmarks for determining whether partition in kind is appropriate, and (4) the potential for reallocation of litigation costs.
Neutral Appraisal
Unless the parties agree on the fair market value of the property, the court will appoint neutral licensed real estate appraiser to determine the property’s fair market value before it is sold at a partition sale. The appraisal is filed with the court and sent to the owners. If they do not agree on the results they can file objections and provide their own evidence.[3]
Right of First Refusal
After the appraisal is performed the court will notify the co-owners of their right to buy out the co-owner that filed the partition action. Essentially, the non-petitioning co-owners have a right of first refusal to buy out the requesting party.[4]
Benchmarks for Partition in Kind
The existing law favored partition in kind where the property is physically divided according to the respective owners’ interests. Practically speaking partition in kind is not always feasible or advantageous to any party. Under the PRPA the court will consider various factors before ordering a partition in kind, including (i) whether the property can practicably be divided among the co-tenants, (ii) whether division would decrease the aggregate fair market value, (iii) evidence of the ownership of the various co-tenants, and (iv) sentimental attachment to the property. [5]
Costs of Litigation
Prior to the enactment of the PRPA, all parties to a partition action would be responsible for sharing in the litigation costs. Now, a party that opposes a partition action will not be responsible for the costs unless the court determines it is equitable under the circumstances.[6]
The UPHPA or some version thereof has been adopted by more than seventeen states. The sponsors of California’s more recent PRPA reasoned that it simply made sense to extend these protections of notice, appraisal, right of first refusal to all tenancies in common and not just heirs property owners.[7]
The foregoing is not intended to be exhaustive, and the information provided above does not, and is not intended to, constitute legal advice. All information, content, and materials are for general informational purposes only and do not create an attorney-client relationship. The experienced and knowledgeable attorneys at Blake Law Firm are available to answer questions on partitions and help you navigate any other real property issues.
[1] Code of Civil Proc. §§ 872.020 – 874.321.5
[2] Senate Judiciary Committee Analysis, AB 2245
[3] Code Civ. Proc., § 874.316
[4] Code Civ. Proc., § 874.317
[5] Code Civ. Proc. §§ 874.318, 874.319
[6] Code Civ. Proc., § 874.321.5