Selling a Property in a Partition Action

Two paths to a sale

Most San Francisco partition cases that end in a sale follow one of two paths:

Either way, if all parties agree in writing on the method and terms of sale, the court orders the sale on those terms. ¹⁰

The referee's role

The referee acts under the court's orders. The court appoints the referee to divide or sell the property, sets the referee's compensation and can replace the referee. ¹¹ The referee can do any acts necessary to carry out the court's orders, can ask the court for instructions, and can contract with brokers, appraisers and attorneys with court approval. ^{12, 26, 2}

The referee, the attorney of any party, and (with limited exceptions) the guardian or conservator of a party cannot buy the property. ¹³

The broker's role

Under the general partition rules, a broker is hired by the referee with court approval. ² Under the Partition of Real Property Act, the broker is agreed on by the parties or appointed by the court. ⁴ Either way, the broker's job is to market the property to the widest pool of buyers, collect offers that meet the court's requirements, and prepare the information the court needs to confirm the sale.

Under the Partition of Real Property Act, the broker must offer the property "in a commercially reasonable manner" at a price no lower than the court-determined value, and on the terms and conditions the court sets. ⁴ When the broker receives an offer at or above that value, the broker files a report with the court within seven days, including the buyer's name, the proposed price and terms, amounts to be paid to lienholders, and the commission arrangements. ⁹ If no qualifying offer comes in within a reasonable time, the court can approve the highest offer, set a new value, or order a sale by sealed bids or auction. ⁴

Notice of sale

Notice of the sale is given in the manner required for a sale of similar property on execution, and is also given to every party who has appeared in the action. ¹⁴ A private sale can be made on or after the date in the notice and within one year after it. ¹⁵

Court confirmation and overbids

After the referee makes a sale, the referee reports it to the court, including the buyer, price, terms and any commissions. ¹⁶ A party then moves for confirmation on at least 10 days' notice. ⁷

At the confirmation hearing, the court can refuse to confirm and order a new sale if the sale was unfair or improperly noticed, if the price is disproportionate to the property's value, or if a new sale would likely bring at least 10% more on the first $10,000 and 5% more on the rest (after allowing for the expenses of a new sale). ⁸

A responsible bidder can also make a written increased offer at the hearing that meets the same 10% and 5% threshold. The court can then accept the higher offer or order a new sale. ¹⁷

Example: if the reported sale price is $1,500,000, a qualifying increased offer must be at least $1,575,500 ($1,000 more on the first $10,000, plus $74,500 more on the remaining $1,490,000).

After confirmation, the court orders the referee to sign the deed, collect the proceeds and distribute them. ¹⁸

Commissions

Commissions in a partition sale are fixed by the court and divided or limited in the manner provided for probate sales of real property. ¹⁹ Under the Partition of Real Property Act, the court sets a reasonable commission for the broker it appoints. ⁴

Disclosures

California's Transfer Disclosure Statement and Natural Hazard Disclosure Statement rules do not apply to sales or transfers made under a court order, or to transfers from one co-owner to another. Other disclosure requirements may still apply, and agents may provide required disclosures in a separate writing. ^{20, 21} Because the referee often has never lived in the property, buyers should expect limited seller knowledge and plan their own inspections.

Selling an occupied property

In San Francisco, many co-owned properties are occupied, either by one of the co-owners or by tenants.

• Rental units: many residential units built on or before June 13, 1979 have rent control and eviction protection, and those protections continue after a sale. ²² The Rent Ordinance requires written disclosures to tenants about their rights before and after the sale of rental units. ²³
• A co-owner in possession: whether and when a co-owner living in the property must move out is a question for the court and the parties' attorneys. Buyers will want clear terms on possession, and the sale terms reported to the court should state them.
• Tenant counseling: the SF Rent Board offers free counseling on tenant questions. ²⁴

Choosing a broker for a partition sale

Partition sales are court proceedings, so the broker must work within the referee's instructions and the court's orders. Look for:

• Verifiable court-supervised sales you can look up, including partition sales confirmed by the court.
• Experience working for referees, who need neutral, documented communication with every owner.
• Clear reporting. Under the Partition of Real Property Act, the broker's report is due within seven days of a qualifying offer. ⁹
• Experience with your property type, especially for multi-unit or tenant-occupied buildings.
• A current license, which you can check on the Department of Real Estate's public license lookup. ²⁵

See our Featured Specialist for the San Francisco broker we recommend for partition sales.

Sources

1. California Code of Civil Procedure §874.311leginfo.legislature.ca.gov
2. California Code of Civil Procedure §873.110leginfo.legislature.ca.gov
3. California Code of Civil Procedure §873.010leginfo.legislature.ca.gov
4. California Code of Civil Procedure §874.320leginfo.legislature.ca.gov
5. California Code of Civil Procedure §873.520leginfo.legislature.ca.gov
6. California Code of Civil Procedure §873.730leginfo.legislature.ca.gov
7. California Code of Civil Procedure §873.720leginfo.legislature.ca.gov
8. California Code of Civil Procedure §873.730leginfo.legislature.ca.gov
9. California Code of Civil Procedure §874.321leginfo.legislature.ca.gov
10. California Code of Civil Procedure §873.600leginfo.legislature.ca.gov
11. California Code of Civil Procedure §873.010leginfo.legislature.ca.gov
12. California Code of Civil Procedure §873.060leginfo.legislature.ca.gov
13. California Code of Civil Procedure §873.690leginfo.legislature.ca.gov
14. California Code of Civil Procedure §873.640leginfo.legislature.ca.gov
15. California Code of Civil Procedure §873.680leginfo.legislature.ca.gov
16. California Code of Civil Procedure §873.710leginfo.legislature.ca.gov
17. California Code of Civil Procedure §873.740leginfo.legislature.ca.gov
18. California Code of Civil Procedure §873.750leginfo.legislature.ca.gov
19. California Code of Civil Procedure §873.745leginfo.legislature.ca.gov
20. California Civil Code §1102.2leginfo.legislature.ca.gov
21. California Civil Code §1103.1leginfo.legislature.ca.gov
22. SF Rent Board, "Learn about San Francisco rental laws"sf.gov
23. San Francisco Rent Ordinance §37.9(k)sf.gov
24. SF Rent Board, "Speak with a Rent Board counselor"sf.gov
25. California Department of Real Estate, Public License Lookupwww2.dre.ca.gov
26. California Code of Civil Procedure §873.070leginfo.legislature.ca.gov