California recently enacted the Uniform Partition of Heirs Act. This act protects estate beneficiaries who might otherwise be compelled to sell their share in an inherited, jointly-owned property. New York law for heirs property | California Estate Planning Lawyer

“Heirs Property” in California

The Uniform Partition of Heirs Act creates and recognizes a specific type of asset called “heirs property.” Under most circumstances, heirs property is any real property that is held in tenancy in common—a legal arrangement where “two or more parties share ownership rights in a real estate property.”

An Heirs Property Must Meet Certain Conditions

  1. The heirs to the property cannot be bound by any contract or agreement governing the property’s sale.
  2. One or more of the tenants must have inherited a title from a relative, who may be either living or deceased.
  3. Any one of the following elements must be fulfilled: (1) a co-tenant relative holds 20% or more of the interest in the property; (2) a co-tenant holds 20% or more of the interest in the property, inherited from a living or deceased relative; or (3) at least 20% of the co-tenants are relatives.

If a California probate court finds that a property could be considered an heirs property, it will order a licensed real estate agent to determine the property’s fair market value. Once the appraisal has been completed, interested parties will have the opportunity to raise their objections. Conversely, properties that do not meet these conditions will be appropriated in accordance with the Partition of Real Property Act (PRPA).

The Advantages of the Uniform Partition of Heirs Act

Before the passage of the Uniform Partition of Heirs Act, any co-tenant could force the sale of a disputed property—even against the wishes of other tenants and shareholders. Under certain, limited circumstances, a forced sale could lead heirs to receive significantly less money than if they had retained the property or sold it independently.

The Uniform Partition of Heirs Act revises the process of partition by providing estate beneficiaries with the opportunity to both contest the sale and purchase other shareholders’ interest in the property.

Partitioning an Heirs Property: Requirements

  • Notice of action. If a co-tenant entitled to contest a partition under the Uniform Partition of Heirs Act initiates an action under this statute, they must post a sign on the property. The sign should detail the property and indicate the name and address of the court in which the action is being adjudicated.
  • Fair market assessment. After a property has been categorized as an heirs property, the probate court overseeing the case will assign a disinterested real estate appraiser to assess the property’s fair market value. Once the appraisal has been completed, the real estate agent will file a sworn affidavit with the court.
  • Notice of assessment. Following the completion of the fair market appraisal, notice must be provided to all interested parties that an appraisal has been filed with the court.

After the appraisal has been submitted to the court, parties may file their own objections or submit evidence to challenge the assessment. The parties will then be presented the opportunity to purchase co-tenants’ shares in the property.

What Happens if a Buy-Out Isn’t Possible

If a co-tenant cannot buy other shareholders’ interest in the property, the partition of the property may proceed according to pre-existing law. Under most circumstances, California probate courts privilege partition-in-kind, whereby contested properties are physically divided proportionate to each tenant’s ownership interest.

The California Uniform Partition of Heirs Act instructs courts to consider the following when determining whether a partition-in-kind could prejudice the co-tenants:

  • The practicality of partition-in-kind
  • Whether partition-in-kind would diminish the property’s fair market value
  • Evidence of the duration of ownership
  • A co-tenant or heir’s sentimental attachment to the property
  • The intended lawful uses of the property
  • The extent to which co-tenants have contributed to the property’s maintenance and upkeep
  • Any other factors which the court deems relevant  
Philip J. Kavesh
Nationally recognized attorney helping clients with customized estate planning guidance for over 40 years.