Actions filed on or after January 1, 2022 seeking the partition of real property that constitutes “heirs property” are governed by the Uniform Partition of Heirs Property Act (the “Act”). Governor Newsom enacted this law to protect heirs who owned real property who were forced to sell the property at below-market price by non-heirs who acquired a small ownership interest in that real property. Therefore, this Act created a new type of real property for the purposes of partition called “heirs property”.
What is “Heirs Property”?
Heirs property is real property that is held in tenancy in common and satisfies the following requirements:
- There is no agreement binding all the co-tenants that govern the partition of the property;
- One or more of the co-tenants acquired title from a relative, either living or deceased; and
- Any of the following applies: 20% or more of the interests are held by cotenants who are relative; 20% or more of the interests are held by an individual who acquired titled from a relative, either living or decease, or 20% or more of the cotenants are relatives.
The Uniform Partition of Heirs Property Act
Effective January 1, 2022, the Uniform Partition of Heirs Property Act (the “Act”), Code of Civil Procedure section 874.311, et seq. governs the partition of inherited property. The purpose of the Act is to protect heirs from unscrupulous speculators who acquire a small partial interest in real property owned by a group of heirs and then force the sale of the property at a below-market price.
Partition of Heirs Property
Pursuant to the Act, if the court determines that the property in question is “heirs property,” the property shall be partitioned pursuant to the Act, unless all of the cotenants otherwise agree in writing or on the record. Pursuant to Code of Civil Procedure section 874.312(e), the term “heirs property” is defined as follows:
(e) real property held in tenancy in common which satisfies all of the following requirements as of the filing of a partition action:
(1) There is no agreement in a record binding all the cotenants which governs the partition of the property.
(2) One or more of the cotenants acquired title from a relative, whether living or deceased.
(3) Any of the following applies:
(A) Twenty percent or more of the interests are held by cotenants who are relatives.
(B) Twenty percent or more of the interests are held by an individual who acquired title from a relative, whether living or deceased.
(C) Twenty percent or more of the cotenants are relatives.
Partitioned Property Subject to Appraisal
In the event the Act applies, unlike a regular partition action, the subject property will be subject to an appraisal by a California licensed real estate appraiser to determine its fair market value before it is sold at a partition sale. Following the appraisal, the parties have an opportunity to object.
Notwithstanding the foregoing, in certain situations, an appraisal will not be required. Specifically, an appraisal may not be necessary if the parties have agreed to the value of the property or to another method of valuation or if the evidentiary value of an appraisal is outweighed by the cost of the appraisal. In the latter situation the court shall determine the fair market value of the property and send notice to the parties of the value after an evidentiary hearing.
When the court determines that the property is considered “heirs property”
If the court determines that the property is considered “heirs property”, then the court will order partition under the Act unless all the co-tenants agree otherwise. Partition under the Act has several different requirements as compared to a partition action not governed by the Act. This includes different notice requirements and a stricter determination of the fair market value of the property.
- Notice – The plaintiff is required to post a sign on the property stating that the action has commenced and identifying the name and address of the court and the common designation by which the property is known. The court may also require the plaintiff to publish on the sign the name of the plaintiff and the known defendants.
- Fair market value – The court will appoint a disinterested real estate appraiser licensed in California to determine the fair market value of the property, who must then file a sworn or verified appraisal with the court. Notice must then be given to all parties that an appraisal was filed with the court, and the court will conduct a hearing to determine the fair market value of the property.
These are just two examples of the different requirements for a partition of “heirs property” under the Act. These additional requirements for a partition action will hopefully prevent heirs property from being sold at below-market prices.
Schorr Law has experience with all types of real estate disputes, including partition disputes regarding inherited property. We have leading cases in California on partition and have litigated partition matters hundreds if not thousands of times. To schedule a consultation with one of our partition attorneys in Los Angeles, California, please contact us at (310) 954-1877, or send us a message by filling out our contact form.
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