Co-Owner Buyouts and Alternatives to a Partition Lawsuit

Most co-owners have more options than a lawsuit

A partition action is a court case, and its costs, including the referee's fees and attorney's fees incurred for the common benefit, are paid out of the sale proceeds before the owners receive their shares. ^{1, 2} Many co-owners resolve their dispute another way, or settle partway through the case. This page walks through the options.

Option 1: Negotiated buyout

One co-owner buys the others' shares at an agreed price. This is the simplest outcome when one owner wants to keep the property and can finance the purchase.

Things to plan for:

Agreeing on value. An independent appraisal or broker's opinion of value gives everyone a common starting point.
Property tax. When part of a property changes ownership, only the portion transferred is reappraised. ³ Ask the SF Assessor-Recorder how a buyout will affect the tax bill. ⁴
Recording. The deed transferring the share is recorded with the SF Assessor-Recorder. ⁵
Transfer tax. Check the city's transfer tax rules for the transfer. ⁶

Option 2: Agreed sale on the open market

All co-owners agree to list and sell the property and split the proceeds. If a partition case is already pending, a written agreement among all parties on the method and terms of sale is binding: the court will order the sale on those terms. ⁷

Option 3: The statutory buyout (Partition of Real Property Act)

For partition actions filed on or after January 1, 2023 involving tenancy-in-common property with no written agreement governing partition, the law builds in a buyout. ⁸

The court determines the property's fair market value, usually by appraisal. ⁹
If any co-owner asked for a sale, the court notifies the parties. Co-owners who did not ask for a sale have 45 days to elect to buy all the interests of those who did. ¹⁰
The price for each selling owner's interest is the court-determined value multiplied by that owner's fractional share. ¹⁰
If more than one co-owner elects to buy, the court divides the right to buy in proportion to their existing shares. ¹⁰
The court sets a payment date at least 60 days after notice. If the buyers pay on time, the court reallocates the ownership interests. ¹⁰

Option 4: Partition by appraisal

If the co-owners' interests are undisputed or have been decided, they can agree to partition by appraisal. The agreement is filed with the court, and one or three appraisers value the property for the division. ^{11, 12}

Option 5: Mediation

Mediation brings co-owners together with a neutral mediator to negotiate. California law does not require mediation in partition cases, but it is available and often useful.

San Francisco Superior Court ADR program: the court's Alternative Dispute Resolution program helps parties in civil cases choose dispute resolution options before trial. ¹³
Community Boards: a San Francisco nonprofit offering community mediation and conflict resolution. ¹⁴
Probate mediation: if the co-owned property is part of an estate, the San Francisco probate court offers a Probate Pro Bono Mediation Program for some disputes. ¹⁵

Option 6: Partition inside a probate case

If two or more beneficiaries of an estate will inherit undivided interests in a property and cannot agree, any of them (or the personal representative at their request) can petition the probate court to partition the property before distribution. ¹⁶ The court can direct the personal representative to sell the property where a sale would be more equitable than partition. ¹⁷ In a probate partition, the expenses of partition are apportioned by the court, but each party pays their own attorney's fees. ¹⁸ For more on probate, see our sister guide at probatessanfrancisco.com.

Special situations

Tenancy-in-common (TIC) buildings

If you own in a tenancy-in-common (TIC) building, start with your written TIC agreement, if there is one, since it may address what happens when an owner wants out. A valid waiver of the right to partition can bar a partition action, and a written agreement governing partition takes the property outside the Partition of Real Property Act. ^{19, 8} Read your TIC agreement with an attorney before acting.

Spouses and domestic partners

Spouses cannot use a partition action to divide their community or quasi-community property. ²⁰ Those questions belong in family court.

Joint tenants

A joint tenant can sever a joint tenancy as to their own interest without the consent of the other joint tenants. ²¹ Severing does not, by itself, divide or sell the property.

One co-owner has paid more

If one co-owner has paid more than their share of the mortgage, taxes, insurance or repairs, the court can order an accounting, contribution or other compensatory adjustment among the parties according to principles of equity. ²² In cases under the Partition of Real Property Act, contributions to taxes, insurance and upkeep are also among the factors the court weighs when deciding between division and sale. ²³

Sources

California Code of Civil Procedure §874.010leginfo.legislature.ca.gov
California Code of Civil Procedure §873.820leginfo.legislature.ca.gov
California Revenue and Taxation Code §65.1leginfo.legislature.ca.gov
SF Assessor-Recorder, "Learn about change in ownership"sf.gov
SF Assessor-Recorder, "Recording a document"sf.gov
SF Assessor-Recorder, "Learn about transfer tax"sf.gov
California Code of Civil Procedure §873.600leginfo.legislature.ca.gov
California Code of Civil Procedure §874.311leginfo.legislature.ca.gov
California Code of Civil Procedure §874.316leginfo.legislature.ca.gov
California Code of Civil Procedure §874.317leginfo.legislature.ca.gov
California Code of Civil Procedure §873.910leginfo.legislature.ca.gov
California Code of Civil Procedure §873.940leginfo.legislature.ca.gov
San Francisco Superior Court, Civil Division (ADR program)sf.courts.ca.gov
Community Boardscommunityboards.org
San Francisco Superior Court, Probate Pro Bono Mediation Programsf.courts.ca.gov
California Probate Code §11950leginfo.legislature.ca.gov
California Probate Code §11953leginfo.legislature.ca.gov
California Probate Code §11955leginfo.legislature.ca.gov
California Code of Civil Procedure §872.710leginfo.legislature.ca.gov
California Code of Civil Procedure §872.210leginfo.legislature.ca.gov
California Civil Code §683.2leginfo.legislature.ca.gov
California Code of Civil Procedure §872.140leginfo.legislature.ca.gov
California Code of Civil Procedure §874.319leginfo.legislature.ca.gov

Buyouts and Alternatives to a Partition Lawsuit