Legal Question in Real Estate Law in California

Re: Partners in a property - one refuses to sell and foreclosure is near

You do not have a great deal of time to do anything! Filing suit for partition will not get you a trial for months, maybe a year and foreclosure can take place prior to that date. However, the only alternative at this late stage may be to "cure" the arrearages, and/or get a new loan and THEN file suit. I do not agree that a "trustee" will be appointed to do the partition if you file suit for partition--you can file suit, and then come to an agreement with your partner to the effect that you will settle the matter by agreeing to a particular real estate agent to list and sell your property. If time were no object, a partition suit is the way to go, because the court has no alternative but to grant a partition of your respective interests, and once your partner realizes that, he will likely agree to cut the costs and sell--the costs of suit will be assessed against the proceeds.

Re: Partners in a property - one refuses to sell and foreclosure is near

Either way, it's going to require court supervision, which is going to increase costs. That's just the nature of the beast.

Most importantly, how to resolve the foreclosure issue. If there is cash in the partnership or some sort of income stream, you need to immediately get into court to force the appointment of a receiver, whose sole job is to pay the mortgage so that you can avoid foreclosure. Either partition or disso of the partnership will take much, much longer than two months.

Get yourself to an attorney quickly to figure out the best way to handle the issues in your particular situation.

We are real property litigators with extensive experience with litigation arising out of and concerning transactional real estate disputes such as this one. There should be a simple solution to your problem. If you like, we will be pleased to review and provide a no charge consult for you. Email or mail the underlying documents if you wish to proceed.

Good luck.

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Re: Partners in a property - one refuses to sell and foreclosure is near

I agree with Ms. Deming. Your first step here is a reality check on the timing issues and the net equity, if any, in the property. It may turn out that your best bet is to let the foreclosure take place, then sue the other owner or partner for damages.

If, however, there is sufficient net equity in the property, someone should cure the default (Step 2) and then keep the payments current.

Most partition suits don't involve trustees (actually, they are called referees, not trustees), because the parties have enough common sense to settle or partially settle before it gets to that stage; they get a stipulated interlocutory judgment of partition that includes their agreement to use ordinary commercial means to sell the property, then an allocation of the net proceeds upon a binding private arbitration of the parties' claims. Or one buys the other out.

Whether the proper legal action is a partition suit or a suit based on the partnership statutes may depend upon how title to the property is held. More likely than not, it is held as tenants in common, or possibly as joint tenants. In either case, this would primarily be a partition action, but perhaps would include related causes of action for partnership issues such as dissolution and breach of fiduciary duty.

If, however, the property is held in the name of the partnership, or should be held in the name of the partnership, then careful legal attention should be paid to whether partition is proper. The partition law does not appear to encompass property held as partnership property.

Incidentally, mere co-ownership of property does not, in itself, create a partnership. However, if the co-owners regard their arrangement as a business they are conducting together for profit, and they will be sharing the profit in some manner, a partnership is probably created, and there is case law to the effect that the property devoted to, or the subject of, the joint business arrangement becomes partnership property despite legal title being held in the name of one or the other, or both, partners as individuals.

So, do Step 1, figure out your economics; then Step 2 (if warranted by Step 1) cure the default. Then you can get good legal help to unwind this mess and salvage the maximum possible.

Finally, the advertisement: I have done several very similar matters and am very familiar with this area of the law. Even though you're miles away, I could handle this effectively and economically AFTER you do Steps 1 and 2.