First Refusal

First Refusal: California’s Dispute Solution

Written by Elen Orleans, Edit & Graphic by Alexandra Blair July 10, 2023

When individuals co-own a property, whether it be family members or business partners, disagreements are not uncommon. These disputes can quickly escalate, making it challenging to find a suitable solution that satisfies all parties involved. Fortunately, California offers a legal remedy known as the Right of First Refusal, which provides an opportunity for co-owners to buy out each other's shares and resolve co-ownership disputes amicably.

What is the Right of First Refusal?

In a California partition action, the Right of First Refusal grants co-owners the right to purchase the interests of their fellow co-owners before the property is sold to an outside party. This essential provision ensures that all co-owners have a fair chance to address any disagreements and find a resolution without resorting to selling the property on the open market.

The Partition of Real Property Act:

To further strengthen the Right of First Refusal, California enacted the Partition of Real Property Act, which took effect on January 1, 2023. This Act specifically applies to situations where there is no written agreement among the co-owners governing the partition of the property, and the property is held in tenancy in common. It grants non-partitioning parties the opportunity to buy out the interests of the partitioning parties, creating a more equitable and controlled process for resolving co-ownership disputes.

Waiver of the Right to Partition:

While California law generally guarantees the right to partition, the Right of First Refusal can act as a waiver to this right if the co-owners agree to it. By agreeing to the Right of First Refusal, the co-owners modify their statutory right to partition, ensuring that the selling co-owner must first offer their share to the other co-owners before seeking a partition. This agreement provides an opportunity for negotiation and potential resolution before resorting to a forced sale of the property.

Declining the Right of First Refusal:

If a co-owner declines or fails to exercise their Right of First Refusal within a reasonable timeframe, the selling co-owner is relieved of their obligation to offer the property for purchase. In such cases, the selling co-owner can proceed with a partition action, enabling them to force the sale of the property and move forward with their individual interests.

Seek Professional Guidance:

Navigating co-ownership disputes and the legal intricacies of the Right of First Refusal can be complex. Therefore, it is crucial to consult with an experienced real estate attorney in California who specializes in partition actions. A knowledgeable attorney can guide you through the process, protect your rights, and help you achieve a favorable outcome.

Disagreements among co-owners of a property can be emotionally and financially challenging. However, California's Right of First Refusal offers a valuable opportunity for co-owners to address these conflicts without resorting to the sale of the property to an unknown third party. By understanding and leveraging the legal provisions available, co-owners can work towards a mutually beneficial resolution. If you find yourself in a co-ownership dispute, it is advisable to seek the assistance of a qualified partition attorney who can provide expert advice and representation throughout the process.

Remember, in California, the Right of First Refusal can be the key to unlocking a harmonious resolution and preserving the equity in your property. Contact our attorneys today at (855) 219-3333 or click here to schedule a FREE 30-minute consultation at no obligation!