Business Law Journal

Background

After Leslie J. Knowles (“Decedent”) passed away in 2020, a legal dispute arose over the distribution of her interest in real estate property she co-owned with Ruth Catello (“Catello”). The property was owned as joint tenants with a right of survivorship, meaning that Decedent and Catello each owned an equal, undivided share in the property. Due to the right of survivorship, Decedent’s ownership interest was to automatically pass to Catello upon her death. 

However, in September 2020, Decedent recorded a quitclaim deed that, if valid, severed the joint tenancy and created a tenancy in common, allowing her share of the property to pass through her estate to her heirs. Decedent died a few weeks after the 2020 quitclaim deed was recorded and, in November 2020, her surviving siblings initiated probate proceedings to distribute her estate, including the property. In response, Catello filed various petitions, and the probate disputes have not yet been resolved. A trial on the parties’ competing claims is scheduled for August 2025. 

Importantly, Catello sued two of the siblings in February 2022, seeking to invalidate the 2020 quitclaim deed and quiet title in her favor. All four of Decedent’s siblings responded by filing a cross claim to partition the property by sale, arguing the deed was valid and that the Decedent’s interest in the property passed to them through intestate succession. The superior court ruled in the siblings’ favor and ordered a partition by sale in January 2023. The court’s order first allocated the proceeds to any sale expenses, liens, and attorney’s fees, with the residue to be distributed equally between Catello and Decedent’s estate. Catello appealed, contending that the unresolved probate proceeding prevents the siblings from asserting an ownership interest as required to take action regarding the property. 

Standing for Partition Claims

Under California Code of Civil Procedure (“CCP”) § 872.210(a)(2), only an owner of an estate of inheritance in real property may commence a partition action. As such, the Court of Appeal reiterated that a clear title to property is the only “indispensable requirement” for a partition action. However, the Court found that because the validity of Decedent’s 2020 quitclaim deed remains uncertain until the probate court rules, the siblings’ ownership interests have yet to be determined. Consequently, the siblings do not meet this requirement as they lack current clear title to the property. 

Furthermore, the Court emphasized that standing must be established at the outset of a partition claim. The Court highlighted that a decedent’s heirs only have rights to real property “subject to the administration of the estate and to its distribution in accordance with the law or the will [.]” Bank of Ukiah v. Rice (1904) 143 Cal. 265 (“Ukiah”). Catello’s naming of two siblings as defendants in her quiet title action was mere compliance with the procedural requirement of CCP § 761.020(c) to identify known adverse claimants, not an acknowledgement of their ownership. Thus, the Court of Appeal held that until the official estate distribution occurs, the heirs have no enforceable interest in property. 

Ownership Interests Before Probate is Finalized  

After determining that the siblings lacked an interest in the property absent a probate court ruling, the Court analyzed whether the general proposition that heirs may convey or encumber expected property interests applies. Though the Court affirmed this principle to be true, it held that the principle does not extend to an unconfirmed interest. Since the probate court has not yet determined who has an interest in Decedent’s share of the property, and there is a third party involved, the siblings cannot establish a legitimate expectation of inheritance. Indeed, the Court stated that there is a possibility the entire property belongs to Catello if the 2020 quitclaim deed is deemed invalid and the joint tenancy remains. Accordingly, the siblings hold only a contingent, unconfirmed interest in half of the property, while Catello owns the other half outright, beyond the reach of probate. As a result, the siblings have no right to convey or encumber the estate or Catello’s separate interests. 

Additionally, the Court found that in the context of a partition action, an heir’s ability to transfer or encumber an expected interest is strictly limited by Probate Code § 9823, which expressly grants partition rights to the estate administrator. As such, the Court of Appeal concluded that the Decedent’s estate has a separate administrator who holds those rights and rejected the siblings claim that the administrator can delegate those rights. Moreover, it held that even heirs with a confirmed, expected interest in property will be limited by this section. 

Conclusion 

The decision in Catello underscores the importance of establishing clear, confirmed ownership before heirs assert property rights – whether through partition, conveyance, or encumbrance. Without a finalized probate ruling, acting on an expected inheritance can lead to legal challenges and setbacks without establishing confirmation this expectation is undisputed. Understanding these requirements is essential to avoid costly disputes and ensure rightful ownership. 

AALRR has experienced attorneys to help you navigate the complexities of legal proceedings regarding the distribution of estates and ownership rights. If you are facing probate uncertainties or disputes, contact the authors for assistance.

This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process.

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