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When Beneficiaries Don’t Agree!

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June 10, 2020 Words by The CREM Group

3 Types of Partition Actions in California Probate Sales. One costs money.

 

What Happens When Beneficiaries Don’t Agree?

 

When two or more people inherit a piece of real property (a home, for instance), they may not agree on what should happen with the real estate. One may want to sell. Another may want to rent it out, while a third may desire to live in it. It’s a problem because if one of the inheritors wants to cash out, another party may refuse (often when they are living in the home).

 

Certainly, in Southern California’s Los Angeles and Orange Counties, where the CREM Group specializes in probate, trust, and conservatorship sales along with many other types of real estate, beneficiaries often disagree on how their property’s sale should be handled. We get it. Selling a home out of probate under these circumstances is difficult but not impossible, thanks to a provision in the California law.

 

THE GOOD NEWS: One of your siblings cannot stonewall you and claim a right of possession in order to keep you and your other siblings from the proceeds of the sale of the home. The way to handle this is through a California Partition Action. An experienced probate real estate agent like those of us at the CREM Group will know about this provision.

 

The 3 Types of Partition Actions in California

 

1. Partition in Kind – This is difficult with a home. You cannot give one bedroom to one beneficiary and the kitchen and living room to another. If there were two homes of similar value, it might work, but it’s unusual.

 

2. Partition by Appraisal – A professional appraiser is brought in to value the property. If all beneficiaries agree and the percentage ownership is amenable, the home can be sold and the proceeds divided, or one party can buy the other(s) out to handle the terms of the will or trust. No lawsuit is required if all parties can agree.

 

3. Partition by Sale – This choice involves a lawsuit. A “Partition Action” is filed with the court. The court determines the percentage(s) of ownership through the process of an interlocutory hearing. A court-appointed referee finds a real estate agent whose role is to find buyers interested in buying the property through an auction in the courtroom. Bidding and overbidding are allowed.

 

How to File a Partition Action If you cannot agree, you must file a “Partition Action” through the courts, by way of an official Petition for Partition Action. All partial owners in the property have the right to file for the partition action. We recommend working with an experienced attorney who specializes, at least in part, in real estate law.

 

Mediation in Lieu of the Partition Action We advocate for mediation rather than the Partition Action (PA). Mediation can be done before or during the filing of the PA. Beneficiaries can sometimes change their minds when they find out the costs and the delays associated with the lawsuit. Your families will get less money and may have to wait months to get it if the court docket is full. Probate real estate agents in California often advise against filing a Partition Action for these reasons. Sometimes, it’s not possible, but mediation is the preferred/less costly route here. Even so, it is wise to know the pros and cons of a Partition Action.

 

Pros and Cons of a Partition Action The primary benefit is that the partition action halts a standoff between owners that cannot agree on the dissolution of the property. The primary disadvantage is the cost.

 

PROS • This is the best course when co-owners do not concur on ownership percentages or on selling the property, and it cannot be done through mediation. • If some of the attorney’s fees and referee’s costs can be recovered, this might be a good option. • Often, costs associated through renovations may be reimbursed through the process of the Partition Action.

 

CONS • Legal fees, referee costs, and filing fees are high • The courts are overloaded; it takes time to find a hearing date, time to find buyers, time to be in court. • A forced sale or a sale at auction may result in less money than if the home were sold on the open market.

 

Cost of a Partition Action & Attorney Fees In California, the expense of a Partition Action and the associated attorneys’ fees can vary by thousands of dollars. It depends on the complexity of the litigation. Attorneys’ fees can go from $20K to > $100K per defendant or plaintiff.

 

Find Experienced Probate Real Estate Agents and Real Estate Attorneys We hope you have seen that the Partition Action can become costly, and may be better if it’s avoided. Meanwhile, this is a handy tool if people cannot agree. It’s good to know that the laws of the State of California are there to protect people in the area of probate real estate, which is sometimes tricky. It’s best to have professionals experienced in the field.

 

As long time probate real estate agents for all kinds of properties in Los Angeles and Orange Counties, we have made sure we support our clients so they know the legal aspects of selling their probate, trust, and conservatorship homes in California.

 

As always, contact us by email here if you have any questions about real estate, probate real estate, conservatorship, or trust real estate properties, especially in Los Angeles and Orange Counties in California.

 

Mark Cianciulli, Esq. mark@cremgroupre.com

 

Daniel Taylor, Esq. daniel@cremgroupre.com

 

DISCLAIMER: This content is meant purely for educational purposes. It contains only general information about real estate and legal matters. It is NOT legal advice and should not be treated as such. We recommend consulting a legal or tax professional before acting on any material, opinion, or point of view described herein.

 

COVID-19 Safety. As all of us at the CREM Group market and sell our inventory of probate, trust, and conservatorship homes for our clients, we adhere to the COVID-19 regulations set by the California Association of Realtors.

 

Testimonials

  • “Attorney’s themselves, The CREM team had the process dialed. After an unexpected family loss, we were in no condition to handle such a complicated transaction. From the very beginning, they laid out the process of the sale, their strategies to get it sold for the highest price and executed each phase just as discussed. Professionalism at it’s finest.

    Frankie C.

  • “Attorney’s themselves, The CREM team had the process dialed. After an unexpected family loss, we were in no condition to handle such a complicated transaction. From the very beginning, they laid out the process of the sale, their strategies to get it sold for the highest price and executed each phase just as discussed. Professionalism at it’s finest.

    Frankie C.

  • “Attorney’s themselves, The CREM team had the process dialed. After an unexpected family loss, we were in no condition to handle such a complicated transaction. From the very beginning, they laid out the process of the sale, their strategies to get it sold for the highest price and executed each phase just as discussed. Professionalism at it’s finest.

    Frankie C.

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