CALIFORNIA’S NEW PARTITION LAW: THE UNIFORM PARTITION OF HEIRS PROPERTY ACT
What’s New?
Prior to July 23, 2021, an owner of real property in the state of California was authorized to commence and maintain a partition action against all persons claiming interests in the estate as to which the partition is sought. If the court finds that the property owner is entitled to that partition, the court is REQUIRED to make an interlocutory judgement that determines the interests of all claimants and order that the property be divided among those parties in accordance with their interests or sold with the proceeds divided among them, as specified.
After that date, the Assembly Bill AB 633 was enacted. This bill, known as the Uniform Partition of Heirs Property Act, requires new procedures for an action to partition real property that is heirs’ property.
AB 633 Aims for Social Justice by Protecting Heirs
The Uniform Partition of Heirs Property Act is meant to “address a longstanding problem: the exploitation of laws governing inheritance, ownership, and sale of property by unscrupulous speculators, who acquire a small ownership interest in real property owned by a group of heirs and then force the sale of the property at a below-market price. As detailed by academics and investigative journalists, Black property owners have often been the group most victimized by such practices.” AB 633.
Greg Barlow, in an article by the Law & Society Association demonstrates how families of color have been disproportionately affected by partition laws of the past:
“Intestacy disproportionately impacts Black and LatinX communities, due to enormous racial and ethnic will-making and estate planning gaps. Real estate speculators often attempt to acquire a small share of heirs’ property in order to file a partition action and force a sale against the will of many disadvantaged families. Using this tactic, an investor can acquire the entire parcel for a price well below its fair market value and deplete a family’s inherited wealth. The forced sales of heirs’ property represent one of the leading causes of black land loss.”
By forcing an entire group of heirs to give up their small share for a below-market price, any hope of improving the home for future sale to make a profit is out the window and only a fraction of their inheritance is received. AB 633 hopes to prevent just that.
As Defined in Legislation, Heirs’ Property is Property:
For which there is no written agreement regarding partition that binds the co-tenants of the property;
Which one or more of the co-tenants acquired from a relative; and
Meets one of the specified thresholds regarding co-tenants who are relatives or who acquired title from a relative.
New Procedures in Place
If a co-tenant requests partition by sale, AB 633 would give the other co-tenants who did not request the partition the option to buy all of the interests of the co-tenants that requested partition by sale, as specified. This would allow the heirs to maintain their ownership of the property, should they desire.
Then, if all of those interests are not purchased or a co-tenant who has requested partition in kind remains present after the purchase, the bill would require the Court to partition the property in kind or by sale. This gives heirs a chance to save their property, rather than be forced to sell it completely.
AB 633 even provides specific procedures on how to appraise the property!
The bill would permit the court to apportion the costs of partition among the parties in proportion to their interests, but would prohibit the apportionment of costs among parties that oppose the partition, except as specified. The bill would provide that these provisions supplement existing law and control over existing law that is inconsistent if an action is governed by these provisions.
From a legal standpoint, AB 633 allows one heir to buy out another heir at the current appraised value of the property, thereby taking away the leverage that a non-cooperating co-owner might have. By not cooperating and forcing the sale, co-owners of the past could make sure that all heirs were forced to sell their interest to the highest bidder. Now, that option is off the table and in the interest of justice, all heirs must cooperate, receive their fair share, or maintain their interest in their property. This may set up thousands of families for success in the future through their maintenance of a tangible investment.