How To Resolve Property Value In Partition Cases

With real estate prices steadily rising in the Southern California and Los Angeles markets, we are seeing more and more disputes between certain property owners who wish to sell a parcel of property and their co-owners who do not wish to sell.  In that circumstance, the owners who wish to sell often bring an action for partitionPartition is the court-aided process whereby a co-tenant forces the sale of real property when the other co-tenant does not want to sell.  However, we often advise our clients to first attempt to reach an informal agreement before pursuing a court ordered judgment.  In this blog post, I will detail the general framework we follow in pursuing an informal agreement between co-owners of property.

Logically, the sticking point in any negotiation usually comes down to price.  In the event that a price cannot be agreed upon internally, we have found that the most accurate and efficient option involves appointing multiple appraisers to assess the value of the Properties.

Step 1: Both Sides Appoint An Appraiser

We propose that the parties start with 2 appraisers.  Thus, the parties in favor of a sale obtain one appraisal and the parties opposed to the sale obtain a separate appraisal.  If the appointed appraisers then come to valuations within 10% of each other, the valuation would be the average of the two appraisals.

Step 2:  If Necessary, A Third Appraiser Is Consulted

If the appointed appraisers differ in their valuation by more than 10%, the two appointed appraisers must jointly select a third appraiser.  The third appraiser then issues an appraisal that is averaged with the next closest appraisal to determine the binding fair market value.

Step 3:  If Necessary, The Court Appoints The Third Appraiser

If, however, the two appraisers appointed by the parties are unable to agree on the third appraiser, then the parties can ask the Court to appoint the third appraiser.  This is obviously a waste of resources and involves the type of court intervention that the parties are attempting to avoid.  For this reason, the parties should first pressure the two appointed appraisers to come to a consensus.

Nevertheless, at times, the parties will not be able to avoid seeking the Court’s intervention where a proper valuation has not been agreed upon based on step 1 and 2.  If the parties must consult the Court, the parties should bear in mind that: (1) the ultimate goal of any partition is to maximize the value of any sale for the co-owners and (2) obtaining a court appointed appraiser is still a far better use of resources than pursuing a contested partition judgment (which at times may be the only available method of resolution).

Please take note that we strongly advise any party seeking the type of arrangement proposed above to clearly define all details of the agreement in a signed writing, which has been reviewed by independent counsel for each side.

Of course, every partition case is different and involves its own independent analysis.  Schorr Law, APC’s Los Angeles real estate attorneys have extensive experience dealing with partition cases throughout Southern California and Los Angeles County.  To inquire about a free consultation on your partition claim contact the real estate attorneys at Schorr Law, APC by sending us a message and filling out the contact form, by emailing us at info@schorr-law.com or by telephone at (310) 954-1877.

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