Accounting Issues in Real Estate Partition Actions in California

A partition lawsuit is a legal proceeding that enables a co-owner of real property to force the sale of the property or the division of the property among co-owners. Often, a partition lawsuit includes a claim for an accounting.[1] As part of the accounting, the court may credit a co-tenant for his or her property expenditures in excess of the co-tenant’s fractional share of the property.[2] Alternatively, the court may charge a co-tenant for the rental value of the property when he or she has excluded other co-tenants from the property absent an agreement to do so.[3]

Claim for Rents and Profits in a Partition Action

Each co-tenant has an equal right to possession of the entire property.[4] Thus, no co-tenant may exclude another co-tenant from the property. A co-tenant who excludes another co-tenant from possession of the property is guilty of “ouster”.[5] Based on this underlying law, the courts have derived a number of rules for accounting for rents and profits in a partition action.

Rule 1: An ousted co-tenant is entitled to recover the reasonable value of the use of the property for the period of the ouster.[6]

Rule 2: Even in the absence of any ouster, a co-tenant who is collecting rents from third persons for the use of the property is required to account for the amounts collected to the other co-tenants.[7]

Rule 3: If one tenant agrees to pay the other co-tenants for use of the property, that agreement will be enforced by the courts.[8]

Rule 4: In the absence of third-party tenants, ouster, or a rental agreement between the co-tenants, a co-tenant in possession of the property is not liable to the other co-tenants for the rental value of the property. Rule 5 is an exception to this rule.

Rule 5: When a co-tenant in exclusive possession of the property seeks reimbursement for repairs and other expenditures, such expenditures may be reduced by the rental value of the property, even in the absence of ouster or a rental agreement between the co-tenants.[9]

Claim for Repairs, Improvements, Taxes, Insurance and Mortgage Payments in a Partition Action

A co-tenant is entitled to a credit for expenditures in excess of the co-tenant’s fractional share for necessary repairs, improvements that enhance the value of the property, property taxes, mortgage payments, and insurance premiums.[10] A co-tenant who improves the property in good faith is entitled to reimbursement in a partition action even if the improvements were made without the knowledge or consent of the other co-tenants.[11] In addition, a co-tenant is entitled to reimbursement for improvements that enhance of the property even if the improvements were made by the co-tenant’s predecessor – that is, the person who sold or gifted the fractional property interest to the co-tenant.[12]

For additional information, call our partition attorneys at (310) 656-8000.

[1] See Cal. Code of Civil Proc. §872.140 on the right to an accounting.

[2] Id. See also, Wallace v. Daley, 220 Cal. App. 3d 1028, 1035-1036 (1990).

[3] Zaslow v. Kroenert, 29 Cal. 2d 541, 548 (1946).

[4] Id.

[5] Id.

[6] Id.

[7] In re Fazzio, 180 B.R. 263, 269 (1995).

[8] Wallace v. Daley, 220 Cal. App. 3d 1028, 1039 (1990).

[9] Hunter v. Schultz, 240 Cal. App. 2d 24, 32 (1966).

[10] Wallace v. Daley, 220 Cal. App. 3d 1028, 1036 (1990).

[11] Id.

[12] Id. at 1038.