Attorney Steve internet law essentials – What is a partition action and can you do it for domain names?
What happens when an elderly husband and wife own a home together (and each is on title) and the wife is tired of walking up two flights of stairs to get to her bedroom, and the husband could care less? The wife wants to sell the property and purchase a single level property. There is equity in the property, and the husband is being stubborn and does not want to move. Is this a good case to file a partition action? How would that work?
The bigger question is, what if two people own a domain name and they cannot figure out whether or not to sell it?
Partition action explained
This blog will use the real estate analogy, even though the question in this blog relates to “digital property” namely, internet domain names.
A partition action is a way to terminate and server ownership rights in a particular property when the parties have different plans and motivations as to what should be done with the property they own jointly. Where parties to real estate have common undivided ownership interests in real property, any one or more of them can bring an action for partition against the other owner or owners. The action that would be brought is known as a “Partition Action” A Partition action is an equitable prayer to the Court.
The court hearing the partition action has the jurisdiction and ability to appoint a receiver to preserve property rights of the parties or co-tenants. A partition can either be done as a decree by the Court, or voluntary agreement of the parties. According to the bible on real estate (Miller and Starr):
“The partition action does not create or convey any new or additional interests however, it does result in the common interest becoming what's referred to as “interest in severalty.” This means that the Partition action results in converting the rights of co-tenants from common possession of the entire property into individual rights of exclusive possession of some portion of the property or to sale proceeds of the property for each co-tenant.”
The right of a co-tenant or co-owner to real property having the right to petition for partition is absolute and subject only to a few defenses (such as waiver or estoppel). The California Code of Civil Procedure plays a large role in these types of real estate cases.
Mutual agreement to partition by appraisal
California civil code section 873.910 discusses agreements to partition by use of an appraisal. This code section states:
“When the interests of all parties are undisputed or have been adjudicated, the parties may agree upon a partition by appraisal pursuant to this chapter. Under CCP 873.920: The agreement shall be in writing filed with the clerk of court and shall include:
(a) A description of the property.
(b) The names of the parties and their interests.
(c) The names of the parties who are willing to acquire the interests.
(d) The name or names of a person or persons to whose appointment as referee or referees the parties consent.
(e) The date or dates as of which the interests to be acquired are to be appraised.”
The Court can appoint an appraiser referee to make sure the appraisal process and price is fair.
Recognized equitable defenses to partition actions
1. Estoppel (words or conduct the other relies on to their detriment which precludes partition being equitable);
2. Waiver (express or implied agreements to waive a right of partition – ex. agreements as to real property ownership interests in a divorce decree);
3. Unfairness (ex. where intent of parties would be frustrated by a premature sale).
There may be other defenses to partition actions depending upon your case. Contact us by calling the number below.
Process to initiate partition action
1. See if other owners or co-tenants will agree to partition by appraisal
2. If not, a complaint may be filed, and a TRO or Injunction are possible. Once a complaint is filed, it must be served on Defendants.
Attorney Steve Tip: The complaint must name all persons with RECORDED or otherwise KNOWN INTERESTS in the property
3. After the complaint is filed, the Plaintiff must file a lis pendens with the County Recorder's office
4. The Superior Court hears evidence and decides whether the property must be sold or divided and ultimately orders that the property be split, or the property be sold and the profits split, or an order allowing one co-tenant to “buyout” the other owner based on an appraisal value for the property.
Will the Court's in California allows judicially decree a forced sale in a partition action?
No. As the Court noted in Richmond v. Dofflemyer, 105 Cal. App. 3d 745, 757, 164 Cal. Rptr. 727, 733-34 (Ct. App. 1980):
“As a rule, the law favors partition in kind, since this does not disturb the existing form of inheritance or compel a person to sell his property against his will. Forced sales are strongly disfavored. See Williams v. Wells Fargo Bank (1943) 56 Cal.App.2d 645, 647, 133 P.2d 73.) The 1976 revision of the partition statute, section 872.810, continues this preference, but the standard for allowing a sale of property has been changed from “great prejudice” to “more equitable” under section 872.820, subdivision (b), thereby enabling sale in cases where it previously was precluded under the predecessor statute. Under the former statute whether actual partition could be had or whether a sale was necessary was a question of fact which the party seeking the sale had to prove…… the presumption is that land held in common tenancy can be equitably divided between the parties by allowing each a tract in severalty, equal to his interest in the whole, measured by value….The burden of proof is on one endeavoring to force a sale as against unwilling co-owners to prove that the case is not a proper one for partition in kind.”
So when the wife in our example above wants to partition and sell the property (because her stubborn husband will not), wife will have the burden of proving that merely splitting and dividing the property is not the best way to go and that it is more equitable to merely force a sale of the property and let the parties split the monetary proceeds following the sale. These are arguments to consider in a partition case and the market values and trends in the sales marketplace needs to be considered. This same type of analysis that applies to REAL PROPERTY should apply similarly when a domain ownership conflict arises and one partner or owner of a company wants to sell or transfer the domain while the other wants to hold it for investment purposes.
Contact an intellectual property law firm to discuss your rights to partition property including potentially domain names.
Our firm is licensed to practice law in California and Arizona. We accept federal copyright and trademark cases nationwide. We can help co-owners settle or arbitrate domain name disputes, forced sales, partition by appraisal, and co-owner mediation, arbitration or private agreement or other disputes with co-owners of digital property including domains and websites. We offer flexible legal fees and tenacious legal representation. Please call us at (877) 276-5084 to discuss our services.