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Partition of Real Property – Distribution of Proceeds

Anand Law PC > Real Estate: General  > Partition of Real Property – Distribution of Proceeds

Partition of Real Property – Distribution of Proceeds

DISTRIBUTION OF PROCEEDS FROM A PARTITION SALE : EXPENSES, COSTS, FEES, LIENS… AND ADJUSTMENTS BASED ON EQUITABLE CONSIDERATIONS

California’s statutory framework for partition of real property allows a trial court broad discretion when apportioning the proceeds from a partition sale to the parties.

ORDER OF DISTRIBUTION OF PROCEEDS

An inquiry into the distribution of proceeds begins with California Code of Civil Procedure (“CCP”) Section 873.820, which provides that proceeds from a partition sale shall be applied in the following order:

  1. Expenses of the sale
  2. “Costs of partition”
  3. Liens in their order of priority
  4. Distribution amongst the parties in shares determined by the court

WHAT ARE THE “COSTS OF PARTITION”?

“Costs of partition” are then defined in CCP § 874.010[1]

  1. Reasonable attorney’s fees incurred or paid by a party for the common benefit.
  2. The fee and expenses of the referee.
  3. The compensation provided by contract for services of a surveyor or other person employed by the referee in the action.
  4. The reasonable costs of a title report procured pursuant to Section 872.220 with interest thereon at the legal rate from the time of payment or, if paid before commencement of the action, from the time of commencement of the action.

CCP § 874.040 also discusses the “costs of partition” stating that they should be apportioned between the parties “in proportion to their interests or…as may be equitable.”

[1] It appears that the intention of CCP § 874.010 may have been better served replacing the word “Costs” with “Expenses.”  This would then mean these subcategories fall into the first order of distribution under CCP § 873.020 (“expenses of sale”). This would also seem to clarify any ambiguity with CCP § 874.040, which states that “the costs of partition” shall be apportioned “among the parties in proportion to their interests or make such other apportionment as may be equitable.”

WHEN ARE ATTORNEY’S FEES FOR THE “COMMON BENEFIT”?

As noted above, trial courts have broad discretion in apportioning the proceeds from a partition sale, and in awarding attorney’s fees to one side or the other.  Some takeaways from California Appellate Court decisions:

  • A trial court may deny reimbursement of attorney’s fees under CCP § 874.010 as not being for the “common benefit”
  • A trial court may deny reimbursement of attorney’s fees under CCP § 874.040 under principles of equity
  • A party may not be allowed reimbursement for attorney’s fees that are incurred in connection with the real property at issue prior to asserting a partition claim
  • A trial court may deny costs as unreasonable, unnecessary, or incurred solely for the benefit of the party seeking reimbursement
  • A California Appellate Court found that fees were incurred for the common benefit where a party arguing against the fee award had advocated meritless arguments which caused the other side to incur such fees
  • When multiple claims are involved, an award of attorney’s fees incurred pursuing all claims may be granted where the claims are inextricably intertwined

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Partition Referee & Mediation

Anand Law PC is composed of award-winning attorneys, business/financial strategists, and real estate brokers.   We act as a court appointed Partition Referee throughout California, including in the cities and areas of Los Angeles, Pasadena, Arcadia, Burbank, La Canada Flintridge, Covina, West Covina, Downey, Santa Monica, Glendale, Eagle Rock, Hollywood, Atwater Village, Echo Park, Glassell Park, Loz Feliz, Silverlake, Highland Park, Boyle Heights, Hancock Park, Cheviot Hills, Koreatown, Miracle Mile, Mid City, Venice, Van Nuys, Encino, Studio City, Sherman Oaks, Panorama City, North Hills, West Hills, Thousand Oaks, Calabasas, Granada Hills, Long Beach, Glendora, Anaheim, Inglewood, Santa Ana, Beverly Hills, Pomona, Marina Del Rey, Playa Del Rey, Mar Vista, Culver City, Cheviot Hills, Holmby Hills, Westchester, El Segundo, Hermosa Beach, Redondo Beach, Manhattan Beach, Huntington Beach, Orange, Irvine, Costa Mesa, Newport Beach, Moorpark, Fresno, Stockton, San Francisco, Berkeley, and communities throughout Los Angeles, Orange, Santa Barbara, Riverside, San Bernardino, San Luis Obispo, San Diego, Ventura, San Francisco, Alameda, and Mendocino Counties.

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