California Real Estate Lawyers Blog

When co-owners of real estate cannot agree about what to do with the property, they always have a right to file a lawsuit for Partition. Traditionally, this process was designed and used to literally split the property in to “equal” parcels. However, if the value of the property is primarily a building or home, a physical split does not work, so the Judge may order sale of the property and splitting the proceeds. If the parties can agree, they may partition by appraisal, with one buying the other out. Courts have explained that Partition is “the procedure for segregating and terminating common interests in the same parcel of property. It is a “remedy much favored by the law. The original purpose of partition was to permit cotenants to avoid the inconvenience and dissension arising from sharing joint possession of land. An additional reason to favor partition is the policy of facilitating transmission of title, thereby avoiding unreasonable restraints on the use and enjoyment of property.” Sometimes, due to market conditions, it makes sense to ask the court to order the sale of the property immediately, and after the legal process unwinds, to split the proceeds. In a decision this year out of San Francisco the court ordered the sale first, with deciding the split later. However, one of the parties was unhappy when the court of appeals said that they had it backwards- you must first determine the split, then sell.

In Summers v. Superior Court, Summers and Tan were co owners of an investment property. They had a dispute and a partition action was filed. The trial court ordered the property to be partitioned and sold, and the parties’ ownership interests to be determined at a later date. Summers appealed.

The Court first noted that Code of Civil Procedure Section 872.720. Subdivision (a) declares that “[i]f the court finds that the plaintiff is entitled to partition, it shall make an interlocutory judgment that determines the interests of the parties in the property and orders the partition of the property.” (A ruling is interlocutory if it left issues for future determination.) The order of partition “shall order that the property be divided among the parties in accordance with their interests as determined in the interlocutory judgment (emph. added).” (§ 872.810.)

When someone uses real property which they do not own, they are a trespasser, but if enough time passes that trespass can become an enforceable right. There are several flavors of rights- equitable easement, prescriptive easement, and adverse possession that are considered by the courts and real estate attorneys in analyzing these cases. In a recent decision the negligent trespasser struck out on all three.

In Eric Hansen v Sandridge Partners, LP, the Hansens were farmers. They planted their own property plus a disputed area of ten acres. They learned that the neighbors were in talks to sell their property, and Hansen remembered that there was a discrepancy in the line they had been farming, and there was “a lot line adjustment issue.” He spoke with the neighbor about it and they discussed the issue, but there was no conclusion. The Hansens went ahead and put in irrigation on the disputed property, and then planted pistachio trees. The sale closed and the parties still could not resolve anything, so Hansen sued to quiet title to a prescriptive easement. The trial court denied this claim, but did find that the Hansens had established a right to an equitable easement. The court of appeals said no, the Hansens get nothing, no easement, no adverse possession. But I’ll bet that they would have gotten a prescriptive easement if their complaint was drafted correctly.

Equitable Easement

California title insurance policies essentially indemnify the insured party against loss due to (a) Liens or encumbrances on, or defects in the title to said property; (b) Invalidity or unenforceability of any liens or encumbrances thereon; or (c) Incorrectness of searches relating to the title to real or personal property. The usual scenario Sacramento real estate attorneys see is where the insurance company has liability is if it misses a lien or title defect which later creates a problem. The insured property owner or lender then makes a claim and efforts are made to resolve the problem. But what happens when the title is transferred before the problem is discovered? the holder of insurance may get sued, and then they make a claim against their insurance. In a recent case in Fresno County buyer at a foreclosure was disappointed to learn that the foreclosing lender’s insurance would not help. Due to the policy language and the nature of a trustee’s sale, the insurance was out of reach, and the new owner had to pay off the lien.

In Hovannisian v First American Title Insurance Company, Wells Fargo held a loan secured by a “first” deed of trust. First American provided a lender’s title insurance policy. The borrower defaulted and Wells Fargo foreclosed. The Hovanissians, plaintiffs here, bought the property at the trustee’s sale. They subsequently discovered that there had been a deed of trust recorded prior to Wells Fargo’s which was still a lien against the property. Apparently, this had not been discovered by the title company. Wells Fargo was thus unaware of it.

The plaintiffs made a demand on the title company which was denied – they were never an insured under the policy. Wells Fargo then made a demand on the title company, likewise denied, because Wells Fargo no longer owned the property. Wells Fargo assigned its claims against the title company to the plaintiffs. Plaintiffs then filed this action against First American.