Los Angeles real estate attorneys often deal with partition lawsuits where co-owners of real property decide they cannot be co-owners anymore. Oftentimes the co-owners are family members—brothers and sisters, parents and children. Sometimes they are old friends or just merely investors. If the parties are unable to agree on how to split up the property or their partnership, the solution is a partition lawsuit. Here are the basics on how a partition lawsuit will proceed in court.
One party will have to initiate the lawsuit—the plaintiff. The plaintiff will file a verified complaint for partition. Verified means that the plaintiff is attesting that the complaint is true and correct. The plaintiff’s attorney will need to file and record a lis pendens with the County recorder showing that there is a dispute over the ownership of the property.
The first issue to determine in the litigation is the ownership interests of the co-owners. Notice that the first issue is not usually whether a party has a right to partition. Unless there is a valid waiver, almost every co-owner has an absolute right to partition. Moreover, the ownership interests of the parties are not usually in dispute either. A brother and a sister may have inherited equal ownership shares in an apartment building. While they may argue about everything else in life, their ownership share of 50% each has usually been determined.
To advance to the next stage of the litigation, the parties can then seek an interlocutory judgment. An interlocutory judgment will find that the plaintiff is entitled to partition, will determine the ownership interests of the parties and will order that the property be partitioned.
The next question is the manner of partition. Will the property be sold or divided up among the parties? While the court will first seek to divide a property if possible, partition cases usually involve the sale of the property. When three siblings own a warehouse, for example, the property cannot be divided up into three parts so partition by sale is the solution. Of course, if the property involves multiple parcels the court can divide them up among the parties.
The interlocutory judgment will usually appoint a referee to oversee the sale and also to conduct an accounting. To accomplish these tasks, the referee will hire an auction house or broker to conduct the sale. The referee will also hire an accountant to go over the books and determine any accounting issues. Keep in mind that all of these people will have to be paid and their pay will come out of the proceeds of the sale.
Upon the sale of the property, the referee will report to the court. The report will include all of the details of the sale (the purchase, the price, the terms, etc.). A party or the referee will move the court to confirm the sale and the court will have a hearing, where it will examine the report. The parties can challenge the report and a responsible bidder can even make a higher bid at the hearing. The court will then confirm the sale, the accounting and allocate any costs.
Most partition lawsuits can be resolved without going through this whole process, either through mediation or some other settlement procedure. However, it is good to know how a partition lawsuit will proceed if the parties cannot reach a settlement. It is also good to know the process so that you and your attorney can estimate the costs of the process and work that into your cost-benefit analysis of litigation versus setttlement.
Los Angeles Real Estate Attorney Laine T. Wagenseller handles real estate and business litigation, including partition lawsuits. He is the founder of Wagenseller Law Firm in downtown Los Angeles. For more articles on real estate litigation, please visit www.wagensellerlaw.com. You can contact Mr. Wagenseller at (213) 286-0371 or firstname.lastname@example.org.