Detailed Answer — How sale proceeds are divided after a California partition sale
This section explains in plain language how California courts divide money after a property is sold in a partition action. It uses a simple hypothetical to show the math and the legal rules that usually control.
Governing law (where to look)
Partition cases in California are governed by the Code of Civil Procedure. The partition statutes begin at California Code of Civil Procedure section 872.010 and continue through the chapter on partition actions. See the statutes here: CCP § 872.010 et seq..
Basic rule
When a court orders sale of property in a partition action, the court (or the court-appointed referee/commissioner) takes the sale proceeds, pays liens, sale costs, and court-ordered expenses, and then divides the remaining net proceeds among the co-owners according to their ownership interests (unless the court orders adjustments for reimbursements or credits). Ownership interests usually come from the deed, a written agreement, or the way title is held (for example, tenants in common with percentage interests).
Order of payments from sale proceeds (typical sequence)
- Pay recorded mortgages and other valid liens that attach to the property. These have priority and usually come off the top of sale proceeds.
- Pay costs of sale (real estate commissions, escrow and closing fees).
- Pay court-ordered partition costs (referee/commissioner fees, advertising, appraisal, reporter fees) and any court-awarded attorney fees or costs related to the partition proceeding.
- Pay any costs or charges the court decides must be paid out of the proceeds (e.g., unpaid property taxes).
- Distribute the remaining net proceeds among the co-owners according to their determined shares, subject to any court-ordered credits or reimbursements.
Credits, reimbursements, and adjustments
The court can adjust final distributions to reflect fair equities. Common adjustments include:
- Reimbursement for mortgages, taxes, or necessary repairs one owner paid after title was acquired and before sale.
- Credit for improvements that increased value, if an owner paid for them and seeks reimbursement.
- Offset for waste or damage caused by an owner.
These adjustments are decided by the court after an accounting. The court aims to reach an equitable result, not always a strictly proportional split.
Liens and judgment creditors
Recorded liens that attach to the property (mortgages, mechanic’s liens, tax liens) are normally paid from the proceeds before owners receive their shares. A lien that attaches only to a particular owner’s interest (for example, a judgment that only reached that co-owner’s separate interest) typically reduces that owner’s share.
Hypothetical example (step-by-step)
Facts: Three co-owners hold title as tenants in common with interests of 50% (Owner A), 30% (Owner B), and 20% (Owner C). The property sells for $500,000. Outstanding mortgage = $200,000. Real estate commission (6%) = $30,000. Closing and escrow fees = $5,000. Partition costs and court fees = $10,000.
Calculation:
- Gross sale price: $500,000
- Less mortgage payoff: $200,000 → balance $300,000
- Less commission: $30,000 → balance $270,000
- Less closing/escrow: $5,000 → balance $265,000
- Less partition/court costs: $10,000 → net distributable proceeds $255,000
Distribution by ownership share:
- Owner A (50%): 0.50 × $255,000 = $127,500
- Owner B (30%): 0.30 × $255,000 = $76,500
- Owner C (20%): 0.20 × $255,000 = $51,000
If Owner B had paid $15,000 in necessary repairs before sale and the court orders reimbursement, that $15,000 would be deducted from the pool available to the other owners (or taken from the other owners’ shares) depending on how the court structures the credit, and distributions would be recalculated accordingly.
When ownership percentages are unclear
If the deed does not state percentages or owners dispute shares, the court will determine each co-owner’s interest. The court looks at deeds, contributions to the purchase, written agreements, and evidence of intent.
Practical points about timing and receipts
The court or referee issues an accounting before final distribution. Owners receive their net check only after all payoffs and court-ordered adjustments are made and recorded. If disputes arise, distributions can be delayed until the court resolves them.
How liens, costs, and credits commonly affect final checks
- Mortgages and recorded liens reduce the total available to all owners.
- Sale costs reduce the pool in proportion to ownership unless the court orders otherwise.
- Court-ordered reimbursements usually come out of the distributable proceeds; the court decides whether one owner’s credit reduces other owners’ shares proportionally or is paid from a specific owner’s share.
Bottom line: Net sale proceeds are usually divided according to each co-owner’s legal interest after the court or referee pays liens, sale costs, and court-ordered expenses and resolves any reimbursements or credits.
Disclaimer: This information is educational only and not legal advice. It does not create an attorney-client relationship. For advice about your specific situation, consult a licensed California attorney.
Helpful Hints — What to do if you’re a co-owner facing partition
- Get a title report early to identify mortgages and recorded liens.
- Find and bring the deed and any written agreements that show ownership percentages.
- Collect receipts and records for mortgage payments, taxes, repairs, and improvements you paid. The court may allow reimbursement.
- Ask the court clerk or your attorney for the referee’s accounting and proposed distribution before final disbursement.
- Consider negotiating a buyout or settlement with co-owners to avoid sale and reduce costs.
- Understand that recorded liens and mortgages are paid before owners get their shares.
- Expect sale costs (commissions, escrow, advertising, court fees) to reduce the net pool available to owners.
- If you think you have an equitable claim (e.g., paid for major improvements), be ready to present documentation and ask the court for a credit.
- Consult a California-licensed real estate attorney if you expect disputes over shares, liens, or credits.