Lange v. Schilling - Attorneys Fees - Mediation Before Litigation

California Real Property Partition Law

California law provides that co-owners of real property may file a legal action to request that their interests in the property be partitioned. Code Civil Procedure Section 872.210(a)(1). The first phase of a partition is to determine whether the plaintiff has a right to partition the real property. Code of Civil Procedure section 872.210. However, this is rarely an issue, as the right to partition is absolute so long as the parties are co-owners.

As one of the many issues explained in our Ultimate Guide to Partition Actions in California, if there is indeed a right to partition of the property, an interlocutory judgment for partition is entered. Code of Civil Procedure Section 872.720(a). This order sets forth the interests of the parties in the property, orders the property to be partitioned, and determines the method of partition. Unless there is an agreement of the parties to partition by appraisal or vacant land involved whereby partition in kind is appropriate, this generally means partition by sale of the property. See Code Civil Procedure section 872.810. Only after the partition is completed and all costs adjudicated is a later final judgment entered by the court.

In certain cases, the court may appoint a partition referee, whose duties can include selling the property and holding the proceeds of sale until the court determines the costs, fees, offsets and expense reimbursements in an accounting between the co-owners. Code of Civil Procedure Sections 873.030(a) & 873.010. Even further, ” The referee may perform any acts necessary to exercise the authority conferred by this title or by order of the court,” which may include changing the locks on uncooperative co-owners of real estate and occupants, if allowed by the court. Code of Civil Procedure Section 873.060 & 873.070.

Recovering Attorney’s Fees, Costs, Offsets, Reimbursements and Credits in the Accounting

The partition process includes an accounting whereby attorney’s fees, costs, offsets, reimbursements and credits can be awarded by the court in a partition. Generally, allowable costs and fees are apportioned among the owners “in proportion to their interests,” though the court may “make such other apportionment as may be equitable.” Code of Civil Procedure Section 874.040. To qualify for this exception, it is important to include in the record facts to “support an apportionment in any manner other than according to the respective interest of the parties in the property.” Stutz v. Davis (1981) 122 Cal. App. 3d 1, 5.

The costs of partition under Code of Civil Procedure Section 874.010 include:

  • (a) Reasonable attorney’s fees incurred or paid by a party for the common benefit.
  • (b) The fee and expenses of the referee.
  • (c) The compensation provided by contract for services of a surveyor or other person employed by the referee in the action.
  • (d) The reasonable costs of a title report procured pursuant to Section 872.220 with interest thereon at the legal rate from the time of payment or, if paid before commencement of the action, from the time of commencement of the action.
  • (e) Other disbursements or expenses determined by the court to have been incurred or paid for the common benefit.

These costs of partition constitute a “lien on the share of the party specified” and have “priority over any other lien on the share except those imposed under this section.” Code of Civil Procedure section 874.120.

Proceeds of the sale generated by the partition shall be applied in the following order under Code of Civil Procedure. section 873.820:

  • (a) Payment of the expenses of sale.
  • (b) Payment of the other costs of partition in whole or in part or to secure any cost of partition later allowed.
  • (c) Payment of any liens on the property in their order of priority except liens which under the terms of sale are to remain on the property.
  • (d) Distribution of the residue among the parties in proportion to their shares as determined by the court.

Recovering Attorney’s Fees Against Co-Owners in Partition

Parties commonly attempt to shift the attorney’s fees they have incurred to their co-owners by asking for a determination that they were the prevailing party. Code of Civil Procedure section 874.010(a) allows for this to occur since it includes as an allowable category of recoverable costs “reasonable attorney’s fees incurred or paid by a party for the common benefit.”

“This section, read in conjunction with California Code of Civil Procedure section 874.040 which states: ‘Except as otherwise provided in this article, the court shall apportion the costs of partition among the parties in proportion to their interests or make such other apportionment as may be equitable,’ leads to the conclusion that costs should be awarded in proportion to the litigant’s interest in the property….The purpose of the statute is to divide the cost of legal services among the parties benefited by the result of the proceeding.” Stutz v. Davis (1981) 122 Cal. App. 3d 1, 4.

Stated simply, “section 874.040 permits the trial court to apportion attorney fees based upon equitable considerations.” Lin v. Jeng (2012) 203 Cal. App. 4th 1008, 1025. “A court also can adjust the allocation of fees incurred by a party to the extent they are not “reasonable” as required by section 874.010, subdivision (a).” Orien v. Lutz (2017) 16 Cal. App. 5th 957, 968.

To recover fees, it is important to find special facts that suggest the inequity of requiring one party to pay all of their own fees. For example, in the Lin case, the actions cited by the court involved both (1) active wrongdoing towards other co-owners, and (2) efforts to increase the cost to other parties.

Recoverable Costs, Expenses, Offsets and Reimbursements For Property-Related Expenditures

Co-owners in partition actions often have claims for reimbursement that arose before the lawsuit was filed. These offsets are treated under the law as being claims against the sale proceeds.

Code of Civil Procedure Section 872.140 allows the court to “order allowance, accounting, contribution, or other compensatory adjustment among the parties in accordance with the principles of equity.” The purpose of this rule is found in the Law Revision Commission Comments to this section, which sets forth that it is intended to allow courts to make adjustments among the owners for “such items as common improvements, unaccounted rents and profits, and other matters for which contribution may be required.”

The seminal case of Wallace v. Daley (1990) 220 Cal.App.3d 1028 , 1036 explained as follows:

Every partition action includes a final accounting according to the principles of equity for both charges and credits upon each co-tenant’s interest. Credits include expenditures in excess of the co-tenant’s fractional share for necessary repairs, improvements that enhance the value of the property, taxes, payments of principal and interest on mortgages, and other liens, insurance for the common benefit, and protection and preservation of title.

When the partition action involves one co-owner out-of-possession (usually the plaintiff) and one co-owner in possession (usually the defendant), the owner out-of-possession may claim the value of occupancy of the property. Generally, a claim for the implied rental value of exclusive possession by one co-owner depends upon a showing of actual ouster. As one court explained: “In order for a cotenant who is not in possession to recover the rents and profits, or the value of possession, from the cotenant in possession, he must establish that there has been an ouster….” Estate of Hughes (1992) 5 Cal. App. 4th 1607, 1612.

“An ouster, in the law of tenancy in common, is the wrongful dispossession or exclusion by one tenant of his cotenant or cotenants from the common property of which they are entitled to possession. The ouster must be proved by acts of an adverse character, such as claiming the whole for himself, denying the title of his companion, or refusing to permit him to enter. Actual or constructive possession of the ousted tenant in common at the time of the ouster is not necessary.” Zaslow v. Kroenert (1946) 29 Cal. 2d 541, 548.” The bottom line is that co-owners should be entitled to “admittance upon demand.” Zaslow v. Kroenert (1946) 29 Cal. 2d 541, 548.

“The practical borderline between privileged occupancy of the whole by a single cotenant and unprivileged greedy grabbing which subjects the greedy one to liability to his cotenants is not crystal clear.” Estate of Hughes (1992) 5 Cal. App. 4th 1607, 1612.

However, courts have found it proper to “offset the reasonable value of the use of plaintiff’s interest in the property against the payments for interest, taxes and insurance made by defendants in preservation of the property.” Hunter v. Schultz (1996) 240 Cal.App. 2d 24, 32.

The bottom line is that a skilled partition attorney in California will ensure that the rights of co-owners are properly advanced in the courts to maximize the outcome. If you have further questions, do not hesitate to call or email us to speak with a real estate attorney in California.