Legal Question in Real Estate Law in California

First, at least four kinds of sales are at least thinkable, if not necessarily likely. There could be (1) a buy-out of one cotenant by the other; (2) a voluntary sale in the open market with customary real-estate sales practices and terms; (3) a forced sale pursuant to a lawsuit for partition by sale, see Code of Civil Procedure sections 872.010 et seq.; and (4) a foreclosure (trustee's) sale.

I would suggest the parties consider a voluntary sale or buy-out under #1 or #2 above, but using the methods that a judge or court-appointed referee would use to apportion the net proceeds of sale under a partition by sale, #3.

After a partitiion sale, the court will apportion the net proceeds (after paying off any loans and costs of sale) to the former owners based primarily on their former percentage interests in the property, but making fair and appropriate adjustments for various items including any out-of-proportion outlays by one owner for mortgage payments, property taxes, insurance and necessary repairs, and for long-term improvements and additions made by one owner, not on the basis of that owner's cost, necessarily, but on the basis of what they added to the value upon sale. For example, if co-owner #1 paints the interior at a cost of $X, that may only increase the sales value by 50% of X -- or if the color is hideous, it might even reduce the selling price!

A possible way to handle the apportionment of the net selling price among the former co-owners would be, by agreement, to submit the division to binding arbitration to take place promptly after close of escrow. The arbitration agreement would direct the arbitrator to apply the same principles that would be used in a partition by sale under the CCP.

If one owner wants to buy out the others, much the same process could be used. The property and/or the owners may be very near my office, and I'd be happy to discuss these matters with you further, privately, and without obligation.

If the property is 40 acres, it is probably divisible in kind. Property does not have to be partitioned by sale unless it is incapable of being physically divided. I'd start there first, as that is where the judge is going to be when this thing gets to trial.