Legal Question in Real Estate Law in California

Co-ownership law when it comes to real property is very old and therefore cumbersome. Every owner of real property has all the rights of use and occupancy as if they were the sole owner, but they can only encumber or sell their share. So legally all eight have a concurrent right to live in the property and use it as they wish, rent free, as long as they don't commit "waste," i.e., damage or otherwise impair the value of the property. This is because our law of co-ownership comes from feudal England, where land was owned in large estates, and multiple owners could each easily occupy and use portions of the property without interfering with the others. So the 6.5% owner cannot be evicted by any of the other owners, nor charged rent. In fact, legally all the other owners can be forced to contribute at least partially to what the occupying owner has put into the property. Neither the 25% owner who wants to sell the property on the open market, nor any other owner can sell the property on their own. There is no such thing as "first on the deed" giving any special rights, or "de facto ownership." Of course each owner could also rent out the property, and the other owners would have to put up with it. So you pretty much have a stand-off. This is why savvy co-owners enter into a written co-ownership agreement when they become co-owners, but as you can imagine your situation is more common.

As you may imagine, the law has come up with a way to deal with this. As England became more populous, estates were subdivided, and successive generations of heirs came into conflict as co-owners, a court process called a "partition" action came into being. In old England, a partition was literally that. The parcel was divided up among the owners as fairly as the court could make it. With modern zoning, planning, subdivision and land use laws, of course, the courts can no longer draw a legal line down the middle of a piece of property and call it done. So now the courts partition by sale. The proceeding can be initiated by any owner, and once filed and served the court holds a hearing and orders the property sold by the sheriff, just like a foreclosure. The funds are deposited with the court, and the owners have the opportunity to make claims for any excess contributions they believe they have made to ownership costs. The court rules on the claims, pays any it finds valid, and then the balance is distributed by the proportional share of each owner.

As you can also imagine, this is a very expensive way to resolve the issues, and due to the nature of the sale, the price obtained is usually far less than market price. So partition actions rarely if ever get much past the initial petition stage before the parties negotiate some sort of settlement. Settlements can take many forms, but generally involve either agreement to list the property on the market and divide the proceeds, or one or more of the owners buying out the other owner(s). Buy-out price can be set in many different ways, ranging from simply getting an appraisal, to more convoluted processes involving multiple appraisers, to listing it on the market and then allowing the co-owners who want to buy it to match the price it fetches or let it go and take cash.