October 8, 2024

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Code of Civil Procedure 874.320 CCP – Court ordered open-market sale; sealed bids; auction (Partition Actions)

(a) If the court orders a sale of heirs property, the sale shall be an open-market sale unless the court finds that a sale by sealed bids or an auction would be more economically advantageous and in the best interest of the cotenants as a group.

(b) If the court orders an open-market sale and the parties, not later than 10 days after the entry of the order, agree on a real estate broker licensed in the State of California to offer the property for sale, the court shall appoint the broker and establish a reasonable commission. If the parties do not agree on a broker, the court shall appoint a disinterested real estate broker licensed in the State of California to offer the property for sale and shall establish a reasonable commission. The broker shall offer the property for sale in a commercially reasonable manner at a price no lower than the determination of value and on the terms and conditions established by the court.

(c) If the broker appointed under subdivision (b) obtains within a reasonable time an offer to purchase the property for at least the determination of value, the following requirements apply:

(1) The broker shall comply with the reporting requirements in Section 874.321.

(2) The sale shall be completed in accordance with state law.

(d) If the broker appointed under subdivision (b) does not obtain an offer to purchase the property for at least the determination of value within a reasonable time, the court, after a hearing, may do any of the following:

(1) Approve the highest outstanding offer, if any.

(2) Redetermine the value of the property and order that the property continue to be offered for an additional time.

(3) Order that the property be sold by sealed bids or at an auction.

(e) If the court orders a sale by sealed bids or an auction, the court shall set terms and conditions of the sale. If the court orders an auction, the auction shall be conducted under Chapter 6 (commencing with Section 873.510).

(f) If a purchaser is entitled to a share of the proceeds of the sale, the purchaser is entitled to a credit against the price in an amount equal to the purchaser’s share of the proceeds.

Code of Civil Procedure 874.320

The statute specifies how an open-market sale will be conducted as well as specifying how a real estate broker will be appointed. Ordinarily, under a normal partition action, a partition referee would be appointed under California Code of Civil Procedure 873.010(a), which states: “The court shall appoint a referee to divide or sell the property as ordered by the court.” However, under the Uniform Partition of Heirs Property Act, co-owners may choose a broker, instead of a partition referee, to offer the property for sale. Indeed, a broker, rather than a partition referee, is able to offer the property for sale. This allows a far larger pool of people to be able to market the property for sale.

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