Real Estate Partition: What Every Property Owner Should Know
If you own a piece of real estate with other people, whether it’s a house, land, or other type of property, there may come a time when you want to formally divide up the ownership interests. This process is known as a real estate partition.
Joint ownership of real estate – whether a family home, vacation property, commercial building, or tract of land – often begins amicably enough. Relationships between the co-owners, be they spouses, siblings, parents, and children, or simply friends, start off healthy. Yet over time, disagreements, diverging priorities, and unresolved grievances put strain on these bonds.
Eventually, the situation erupts. One party wants out or plots to force someone else’s hand. But with ownership interests intertwined in the eyes of the law, extricating from such quagmires proves no easy task. Thus the rigid hammer of partition often falls, cleaving ties amidst the debris of broken personal relationships.
What Is a Partition?
A partition is a legal proceeding that allows for the formal division of a property that is owned by two or more people. Typically, a partition results in either the physical division of the property into separately owned pieces or the forced sale of the property with the division of proceeds among the owners. A partition action lawyer will typically guide and represent the case in court.
Common Reasons for Partition
There are several common reasons why a co-owner or a tenant of real estate may want to partition the property:
An owner wants to sell their interest
If one owner wants to cash out but the other owners don’t want to sell the whole property, partitioning allows for a sale of just one owner’s share.
Personal conflicts between owners
Disagreements between owners sometimes make shared ownership unworkable. A partition and listing the property for sale allows the owners to sever ties. Disgruntled owners see no solution or formula for working and the last resort after exhausting all the options is to partition.
Preparing for inheritance
Partition can help avoid future conflicts between heirs. Inherited real estate often has many co-owners over a long course of time resulting in conflicts. So to better guard against conflicts between the heirs, partition becomes the only resort left
Prior to divorce
Spouses who own property jointly may partition prior to finalizing their divorce. The process of a partition sale often differs from a divorce sale. Partitioning property is the most important of all the issues to be sorted out between ex-couples.
What is The Partition Process
The rules and timeline for a partition vary by state. But in general, the process involves these basic steps:
1. Filing a partition lawsuit
One or more co-owners file a lawsuit with the help of a partition action lawyer requesting partition in the appropriate court. This defines the “plaintiff” and “defendant” owners.
2. Determining ownership interests
The court determines the proportional ownership interest held by each party. Typically, this is straightforward if the recorded deed defines the interests clearly.
3. Ordering partition or sale
The court decides whether to physically divide the property or order its sale instead. Generally, the court will order a sale if physical division would materially reduce the property value.
4. Appointing commissioners
If partition is ordered, commissioners are appointed to recommend an exact division of the property among the owners. If the sale is ordered, different commissioners may handle conducting the sale.
5. Finalizing the division or sale
The court approves the final property division or sale. Sale proceeds are divided among owners according to determined ownership interests.
Issues to Consider
Here are some key considerations around real estate partitions:
Complex process
Partitions tend to be expensive and complex legal proceedings. Attorney fees, appraisal costs, taxes, and other expenses will reduce the net value received by owners.
Forced Sale
For properties difficult to physically divide, a forced sale with the help of a partition action lawyer is more likely. But auction prices are often lower than market prices. And auctions have rigid rules on setting minimum bids and reserve prices.
Inherited Properties
For inherited properties, a partition early in the estate settlement process can avoid larger problems later. Delay makes conflicts more likely.
Different Laws
State laws differ on partition procedures, homestead property protections, buyout rights, and more. Understand your state’s laws.
What Are The Alternatives to Partition
Before jumping straight to partition, property co-owners may want to discuss other options:
Buyout agreement
One owner buys out the other owners’ interests. A mutually agreeable sale often preserves more property value.
Delays during the inheritance process
Heirs who receive partial interests can often delay formal property divisions for 6-12 months. This allows time for buyout deals.
Alternate dispute resolution
Using mediation or arbitration services can resolve owner conflicts without the rigid court process.
Conclusion
Owning real estate with multiple parties almost always involves some disputes. But partition can provide an orderly mechanism agreed to under the law. For high-value properties, pursuing negotiated alternatives or a forced sale before or instead of full partition is usually the wisest to maximize outcomes for all.