Legal Question in Real Estate Law in California

An action by one of the owners to sell the property is called "Partition."

Generally, it is a lawsuit for partition, which is covered in the Code of Civil Procedure at sections 872.010 to 874.240. The name "partition" comes from the practice of dividing the land between the co-owners by subdivision of the land. In modern times, because of zoning, the fact that most parcels have indivisible structures on them, and the Subdivision Map Act, it has become the usual practice to have the property sold (usually by ordinary commercial methods using a broker and a listing, rather than a courthouse-steps auction) and the net proceeds divided. The judge or a court-appointed referee will supervise everything and allocate the net proceeds of sale (after paying off liens, sale commissions, etc.) according to the former owners' interests, making adjustments for excess contributions an owner may have made for expenses such as mortgage payment, taxes, insurance, repairs, etc. and redistributing net earnings one owner may have pocketed from third-party tenant rents.

In addition to partition, there are provisions in the Corporations Code for disposal of property owned by dissolving partnerships, corporations, etc. and, of course, the Family Code has provisions for allocation of community property in a dissolution of marriage.

At present, there is a significant problem in doing partitions because of the depressed real estate market. Too often, selling the property doesn't produce enough cash to pay the loans on the property, to say nothing of commissions and costs of the partition proceeding. This could leave the former co-owners with immediate liability for the deficit. A partition sale is not a foreclosure and I don't think it carries the same protection against deficiency judgments. (I would have to research this to be certain).

One frequent result of filing and serving a partition suit is that the defendant often gets an interest in working out an out-of-court resolution, such as one buying out the other's interest or a private (out of court) sale, and so on.