Partition & Co-Ownership  ·  September 30, 2026

Your Name Isn’t on the Deed. The LLC’s Is.

Two investors bought a fourplex together a decade ago and, on their accountant's advice, took title in an LLC. Now one wants to sell and the other refuses. If they held title as tenants in common, the one who wants out could file a partition action and, absent a valid waiver, would be entitled to a division or a court-ordered sale — subject to the other co-owner's statutory right to buy out a co-owner who seeks a sale. But neither of them is on the deed. The LLC is.

That single fact changes the legal path to a sale. This article explains why a member of a California LLC generally cannot partition the company's real estate, how dissolution works instead, why the other members can often stop a sale by buying the departing member out — at a price that may be discounted — and what investors should check before the fight starts. It is current as of September 30, 2026.

Can an LLC member file a partition action in California?

Generally, no. Partition is the remedy co-owners use to end co-ownership of real property. Code of Civil Procedure section 872.210(a)(2) lets a partition action be brought by "[a]n owner of an estate of inheritance, an estate for life, or an estate for years in real property where such property or estate therein is owned by several persons concurrently or in successive estates." A tenant in common qualifies, and California courts describe a co-owner's right to partition as absolute unless barred by a valid waiver (Orien v. Lutz (2017) 16 Cal.App.5th 957, quoting LEG Investments v. Boxler (2010) 183 Cal.App.4th 484). Our article on the cotenant buyout right under California's Partition of Real Property Act explains how that process works when co-owners hold title directly.

An LLC member is in a different position. The property is titled in the LLC, and what the member owns is an interest in the company:

• "A limited liability company is an entity distinct from its members." (Corp. Code § 17701.04(a).)
• "A transferable interest is personal property." (Corp. Code § 17705.01.) A transferable interest is the right to receive distributions (§ 17701.02(aa)).
• Under the LLC statute in effect before 2014, the Corporations Code said expressly that "[a] member or assignee has no interest in specific limited liability company property." A California Court of Appeal applied that rule in PacLink Communications Internat., Inc. v. Superior Court (2001) 90 Cal.App.4th 958, holding that minority members' claims over assets transferred out of the LLC — including a constructive trust claim — belonged to the company and had to be brought derivatively, not by the members individually.

Because the member is not a co-owner of the real estate, the member does not fit section 872.210. As of September 30, 2026, we have not found a published California decision squarely deciding whether an LLC member may partition LLC-owned real property, so this conclusion rests on the statutes and the cases above rather than on a case holding it directly. Code of Civil Procedure section 872.730 allows partition procedures, where the court finds them a suitable remedy and unsecured creditors will not be prejudiced, to be applied in a partnership accounting and dissolution or an action for partition of partnership property; it does not mention LLCs.

How can an LLC member force a sale of the property?

By dissolving the company. When an LLC dissolves, it must wind up, which ordinarily means selling or distributing its assets, paying its debts, and distributing what remains to the members (Corp. Code §§ 17707.01, 17707.04, 17707.05, 17707.06(a)). Section 17707.06(a) confirms that an LLC continues to exist after cancellation for the purpose of "disposing of and conveying its property."

Section 17707.01 lists the events that dissolve a California LLC. Three matter most:

• "[T]he happening of an event set forth in a written operating agreement or the articles of organization" — for example, a fixed term or a buy-sell trigger.
• "[T]he vote of 50 percent or more of the voting interests of the members," or any greater percentage specified in the articles or a written operating agreement.
• A court decree of judicial dissolution under section 17707.03.

That default 50 percent threshold has real consequences in a company split into two equal camps. Unless the articles or a written operating agreement require more, either camp may be able to dissolve the company by vote alone. In Friend of Camden, Inc. v. Brandt (2022) 81 Cal.App.5th 1054, an LLC that owned an office building was split 50-50 between two blocs. One bloc included the LLC's manager, which held a 1 percent interest. The manager sued for judicial dissolution, and the opposing bloc moved to buy out the manager's interest under section 17707.03(c). Before the court stayed the case for the buyout, the manager and the rest of its bloc, together holding 50 percent of the voting interests, voted to dissolve. The Court of Appeal held that under "the plain language of section 17707.01 ... the vote of 50 percent of the LLC membership interests to dissolve the LLC must be given effect." It reversed the order appointing appraisers, and directed that the buyout proceedings be dismissed as moot and the LLC's activities wound up.

Two limits keep this from being a playbook. The court decided only whether the vote extinguished the buyout right, and found it unnecessary to decide numerous other issues the parties raised. And members must exercise their rights consistently with the obligation of good faith and fair dealing (Corp. Code § 17704.09(d)); a dissolution vote also does not by itself put the voting member in control of how the property is sold, since winding up may be contested or supervised by a court (§ 17707.04).

What are the grounds for judicial dissolution of a California LLC?

Any manager or any member may ask a court to dissolve an LLC (Corp. Code § 17707.03(a)). Under section 17707.03(b), the court may decree dissolution whenever any of these occurs:

1. "It is not reasonably practicable to carry on the business in conformity with the articles of organization or operating agreement."
2. "Dissolution is reasonably necessary for the protection of the rights or interests of the complaining members."
3. "The business of the limited liability company has been abandoned."
4. "The management of the limited liability company is deadlocked or subject to internal dissension."
5. "Those in control of the limited liability company have been guilty of, or have knowingly countenanced, persistent and pervasive fraud, mismanagement, or abuse of authority."

Unlike the corresponding statute for corporations, section 17707.03 has no minimum ownership percentage for the member who sues and no cap on the number of members. Corporations Code section 1800, by contrast, limits who may petition: shareholder petitioners (other than in a close corporation) generally must hold at least 33 1/3 percent of the shares, and one ground is limited to corporations with 35 or fewer shareholders.

Can the other members stop the sale by buying you out?

Generally yes, for an LLC organized in California, and in a judicial dissolution case this can be the decisive provision. Section 17707.03(c)(1) provides that "the other members may avoid the dissolution of the limited liability company by purchasing for cash the membership interests owned by the members so initiating the proceeding ... at their fair market value."

The procedure is specific:

• Bond and stay. If the buying members cannot agree on value with the members who sued, and they post a bond to cover the moving parties' reasonable expenses, including attorney's fees if those become recoverable, the court "shall stay the winding up and dissolution proceeding" and fix the value (§ 17707.03(c)(2)).
• Three appraisers. The court appoints "three disinterested appraisers." Their award, or a majority's, "when confirmed by the court, shall be final and conclusive upon all parties" (§ 17707.03(c)(3)).
• Pay or dissolve. The decree provides in the alternative for winding up and dissolution unless payment is made in the time specified. If the buyers do not pay, judgment is entered against them and their sureties for the moving parties' expenses, including attorney's fees (§ 17707.03(c)(3)).
• Valuation date. Value is fixed as of the date the dissolution action was filed, unless the court designates another date for good cause (§ 17707.03(c)(5)).
• No escape by dismissal. "A dismissal of any suit for judicial dissolution by a manager, member, or members shall not affect the other members' rights to avoid dissolution pursuant to this section" (§ 17707.03(c)(6)).
• Damages offset. If filing for dissolution breached an agreement with the buyers, such as the operating agreement, the resulting damages may be deducted from the price — except that a member who sues on the abandonment, deadlock or internal dissension, or fraud, mismanagement or abuse of authority grounds (§ 17707.03(b)(3)–(5)) is not liable for breach-of-contract damages for bringing the action (§ 17707.03(c)(1)).

"Fair market value" can mean a discounted price

This point is easy to overlook. The LLC statute uses "fair market value." The corporate buyout statute, Corporations Code section 2000, uses "fair value," determined on the basis of liquidation value, taking into account the possibility, if any, of a sale of the entire business as a going concern in a liquidation. In Cheng v. Coastal L.B. Associates, LLC (2021) 69 Cal.App.5th 112, four siblings each owned 25 percent of an LLC whose only asset was a warehouse. One sibling sued for dissolution; the other two elected to buy out her interest and the fourth sibling's. The Court of Appeal held that fair market value under section 17707.03 "includes discounts reflected in the market," affirmed a buyout price reflecting a 27 percent discount applied to the 25 percent interests — a discount the majority appraisers based primarily on lack of control and lack of marketability — and reasoned that "[h]ad the Legislature intended to apply a 'fair value' standard to purchases of membership interests under section 17707.03, it would have done so expressly in the statutory language." Under the corporate "fair value" standard, by contrast, discounts for lack of control are improper (Goles v. Sawhney (2016) 5 Cal.App.5th 1014). The court in Cheng noted that the valuation principles had been stipulated to by the parties. The size of any discount in another case will depend on its facts, including the size of the interest being bought.

The practical effect: a member who sues to dissolve an LLC holding a building worth several million dollars may be bought out for a price meaningfully below that member's proportionate share of the building's value. That possibility should be priced into the decision to sue.

The buyout, once elected, largely takes over the case. In Schrage v. Schrage (2021) 69 Cal.App.5th 126, involving corporations and LLCs, the court described section 17707.03's buyout procedures as "substantively identical" to the corporate statute's, and described the buyout, once initiated, as one that "supplants" a cause of action for involuntary dissolution; when the buyers did not pay the appraised price of roughly $40.2 million, the dissolution judgment was affirmed as modified.

Can I just withdraw from the LLC and take my money out?

Not under the default rules. A member has "the power to dissociate as a member at any time, rightfully or wrongfully, by withdrawing as a member by express will" (Corp. Code § 17706.01(a)). But under the default rule in section 17706.01(b), withdrawing by express will before the LLC terminates is wrongful, and a member who wrongfully dissociates "is liable to the limited liability company and to the other members for any damages caused by the dissociation" (§ 17706.01(c)).

Dissociation does not trigger a payout. Section 17704.04(b) provides that, unless the articles of organization or a written operating agreement provides otherwise, "a person's dissociation does not entitle the person to a distribution." Under section 17706.03, the departing member loses the right to vote or participate in management, and any transferable interest the member owned is thereafter owned "solely as a transferee" — meaning a right to receive distributions if and when the company makes them. The statute provides no default right to demand the return of capital or a buyout on withdrawal. Unless the articles or a written operating agreement say otherwise, walking away can leave a member with no vote, no control over the property and no check.

A court has ordered a buyout outside the statute as a remedy for misconduct. In Reliant Life Shares, LLC v. Cooper (2023) 90 Cal.App.5th 14, two of three members froze out and improperly expelled the third, and the trial court ordered, as an equitable remedy, a buyout of the one-third interest at $4.2 million. The Court of Appeal affirmed, observing that "nothing in Corporations Code section 17707.03 ... states or suggests that a court has no equitable power to order buyout damages under other circumstances not involving a member's decision to seek dissolution." That remedy arose from wrongdoing; it is not a general exit right.

What rights does a minority member have while the dispute plays out?

• Books and records. Section 17704.10 gives members a right, on reasonable request and for purposes reasonably related to their interest as members, to inspect and copy the records the LLC must keep, and to obtain its tax returns. A court may enforce the right and, if the LLC's failure to comply was without justification, may award reasonable expenses, including attorney's fees (§ 17704.10(g)).
• Fiduciary duties. In a member-managed LLC, members owe the company and each other the duties of loyalty and care described in section 17704.09. In a manager-managed LLC, those duties run from the managers, and, except as otherwise provided, a member has no fiduciary duty "solely by reason of being a member" (§ 17704.09(f)(3)).
• Direct versus derivative claims. Harm to the LLC's assets is ordinarily harm to the company, so the claim is derivative and must be brought on the company's behalf. In Schrage, a $24.4 million compensatory award and a $10 million punitive award were reversed because the claim was derivative, not direct. Getting this wrong can cost the case.
• A receiver. When property is at risk during the dispute, Code of Civil Procedure section 564(b)(1) authorizes a receiver in an action "between partners or others jointly owning or interested in any property or fund," on the application of a party whose interest in the property is probable, where the property "is in danger of being lost, removed, or materially injured," and section 564(b)(9) allows one where necessary to preserve the property or rights of any party. Our article on receivers and assignment of rents explains how receivership works on income property.

Does California's LLC buyout statute apply to a Delaware or other out-of-state LLC?

It can matter a great deal where the LLC was formed. Some California investors form their LLCs in other states, such as Delaware, Wyoming or Nevada. In Boschetti v. Pacific Bay Investments Inc. (2019) 32 Cal.App.5th 1059, the Court of Appeal held that a California court lacked authority to order a buyout under California's statutes, or a dissolution, of LLCs and limited partnerships organized in Delaware, Hawaii and Texas, because under the internal affairs doctrine the law of the state of organization governs their dissolution, and because California's buyout statute by its terms covers LLCs formed under California law. The properties in that case were in Texas and Hawaii. Applying the same doctrine, a member of a Delaware LLC that owns a building in Los Angeles should expect Delaware law and the operating agreement, not section 17707.03, to govern.

What do investors give up by holding property in an LLC instead of as tenants in common?

Holding title through an LLC brings real benefits, including liability protection, easier transfer of fractional interests and centralized management. But it also trades away the co-owner's statutory exit. A tenant in common can file a partition action, and a co-owner who requests a sale and is bought out under the Partition of Real Property Act receives the value of the entire parcel, as determined by the court, multiplied by that co-owner's fractional share (Code Civ. Proc. §§ 874.316, 874.317(c)). An LLC member generally cannot partition, and must instead rely on the operating agreement, a dissolution vote, or a judicial dissolution suit that the other members can convert into a buyout at a possibly discounted fair market value. For co-investors, the operating agreement's exit terms — buy-sell provisions, deadlock procedures, valuation methods and dissolution triggers — do the work that partition would otherwise do.

What should an LLC member do before forcing the issue?

1. Read the operating agreement line by line. Look for voting thresholds, dissolution triggers, buy-sell or shotgun clauses, rights of first refusal, deadlock procedures, and any valuation formula. These often control.
2. Confirm the state of formation. A Delaware or Wyoming LLC is governed by that state's law on dissolution.
3. Demand the books and records. Know the LLC's debts, reserves, and the property's value before choosing a path.
4. Count the votes. If the member or members seeking a sale hold 50 percent or more of the voting interests and neither the articles nor a written operating agreement requires more, a dissolution vote may be available. In Friend of Camden, such a vote, taken before the court stayed the case for a buyout, cut off a pending buyout election — but the good-faith obligation still applies, the winding up can be contested, and the vote should not be taken without advice.
5. Model the buyout. Before suing for judicial dissolution, estimate what three appraisers might set as fair market value, including possible minority and marketability discounts.
6. Consider a negotiated exit. A negotiated buyout or an agreed sale of the property can be faster and less expensive than an appraisal proceeding.

Our quiet title and partition and contract disputes practice pages describe how we approach co-ownership disputes, including those involving LLC-held property.

Common questions

This article is general information about California law as of September 30, 2026 and is not legal advice. It does not create an attorney-client relationship. Statutes and case law change, and how they apply depends on the specific facts. Anyone facing a specific dispute should consult a lawyer about their own circumstances.

Related reading: our articles on the cotenant buyout right in a California partition and on receivers and assignment of rents.

Attorney advertising. Prior results do not guarantee similar outcomes.