Legal Question in Real Estate Law in California

Re: tenants in common

Let's call the heirs A, B, C, D and E. Suppose further that A, B and C are the ones who have no particular interest in the property, and would be happy to be bought out by someone, possibly D or E, and that D and E both don't want to sell or be bought out.

First, the law has a "last resort" method for dealing with co-ownership situations (whether joint tenancies or tenancies in common) where the co-owners can't agree. It is a special kind of lawsuit called a "partition," and it is described in some detail ni the Code of Civil Procedure. The essence of a partition is that the court will order a sale of the property and a division of the net proceeds. In the old days, partitions were often done by physical subdivision rather than by sale, but this is not often practical in modern times with much property being small, intensely-developed urban lots or due to the restrictions on subdivision under the Subdivision Map Act.

A, B and C are all legally able to sell whatever interest they have to anyone, at any time (absent a contractual restriction such as a right of first refusal). However, they would have a hard time finding a buyer at a realistic price, because few buyers want to buy in to a co-ownership situation. So, as a practical matter, no very satisfactory deal can likely be made without the participation of all five.

The buy-out price if D and/or E were to buy the interest(s) of A, B and/or C would be determined by private negotiation. The price, terms, and whether there is even a deal at all, is strictly up to the parties and there is no law saying a sale must take place, or that anyone must buy, as between the co-owners. Stalemates are possible and in fact rather common. That's why the partition process is available.

If there is a partition, the marketplace will determine the price. Oftentimes, after the court orders a sale and devision of the net cash proceeds, the sale will be conducted by listing with a broker, in the usual commercial manner, rather than any courthouse-steps auction as may happen in a foreclosure. Still, parties in the position of D or E who want to hang on to the property may be the successful buyers, or, maybe, before the property is listed pursuant to an order of partition, a D or E type will step up to the plate and make a satisfactory offer to buy out the A, B and C parties.

If you need further information, pleas contact me directly.

Re: tenants in common

I have handled this situation in the past in California and have experience with its procedures. If more than one person inherit (or otherwise own together) a piece of real estate in California, and one of them wants to sell it, eventually, it will be sold. The other owner(s) cannot legally stop a sale, so it is always better to agree to sell it, and then divide up the proceeds. If one or more of the current owners really want to be the owners of the property, he/she/they can buy out the interests of the other owners, but that can be a little messy (what is the value of the portion being bought out, when will the others get paid), and it would likely be better if there was just a normal lsiting and sale to a third party in the open market.

If you have any further questions about this, please feel free to contact me. My rates for this type of sitauation are very reasonable.

Re: tenants in common

If you can't all agree, then any share owner could bring a legal action for forced sale, or appraisal and division. Shares are determined by the original deed or documents. If equal, then equal it is, based upon the appraisal. Feel free to contact me if you decide to get legal help.