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FORCING BUYOUTS BETWEEN CO-OWNERS OF REAL PROPERTY IN CALIFORNIA

An issue and question that comes up an awful lot in my practice is the question of whether one of the co-owners of real property can be forced to be bought out. This issue comes up when two or more people own property together, and either one of them wants to sell their interest, while the other one refuses to sell; or when one of the co-owners wants to remain a owner of the property but no longer wants to be a “partner” with the other co-owner.

Under these scenarios, partition actions can be very helpful. A “partition action” is a way for a co-owner to force a sale of the entire property. For an article the explains the partition process in California, see:  http://www.businessandrealtylaw.com/2013/02/02/partition-actions-what-do-i-do-if-i-want-to-sell-real-estate-that-i-own-with-another-person-and-the-co-owner-refuses-to-sell-the-property-can-i-force-a-sale-of-the-property/

What about the scenario where you do not want to sell the property? Instead, you want to buy out your co-owner’s interest in the property. Under California law, there is no obligation for the co-owner to sell their interest, while you keep your interest. Partition allows you to sell your interest, but it does not entitle you to buy your co-owner’s interest. A partition action nonetheless can sometimes achieve the goal of buying out your co-owner’s interest. More often than not, when a partition action is filed, eventually one of the parties buys out the interest of the other. So if you file a partition action, there is a realistic possibility that the end result would be a settlement where you (the plaintiff) buy out your partner or co-owner. This outcome does, however, require the other owner’s (the defendant’s) consent.

Another possible method of using the partition action in California to end up with owning the entire property is where the owner that wants to own the whole, makes a bid or offer to purchase the whole as part of the partition proceeding.

Similarly, if you want to be bought out by the other co-owner of the property and the co-owner is not cooperating, you too could use a partition action to potentially achieve your goal of being bought out by the other co-owner. It is very common that despite a co-owner’s refusal to buy out the other owner of the property, after a partition action is filed, the refusing co-owner eventually realizes that you have a right to sell your interest, and if they want to maintain their interest in the property, their best option is to buy you out. Therefore, it is very common in this situation, that after a partition action has been filed, that the co-owner refusing to sell eventually offers to buy out the plaintiff co-owner.

I regularly represent clients in negotiating buy-out agreements and partition actions throughout the Bay Area, in the East Bay, California, in Oakland, California, and in Walnut Creek, California. If you have questions or need representation by a real estate attorney involving a partition action or the need to negotiate a buyout agreement between co-owners, please feel free to contact me to discuss your case or to arrange for a consultation. I can be reached at (510) 465-0025 or (925) 708-3306.

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