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  • Writer's pictureWendy Crowther

The Co-Owner of Real Estate You Own Refuses to Sell — Now What?

There are many options for people who own real estate with others but either wish to sell or no longer want to be a co-owner. A few of these options are obvious — you can buy out the other folks, or they can buy you out. This process typically involves at least one appraisal to determine the fair value of the property. In this instance, a formal "closing" is recommended to make sure the person selling is free and clear and that those remaining have not assumed a judgment or lien of the departing co-owner. This scenario often arises when siblings jointly inherit property from their parents. While most can agree on a resolution, when that seems unlikely, it is often helpful to seek the advice of an attorney for numerous reasons. First, each co-owner has his or her own concerns, obligations, and financial capabilities. A lawyer will consider all of these factors to explore obvious and not-so-obvious resolutions best suited to you. Second, It is important to understand the ramifications of owning real property in which you may not reside, of owning property which others can “encumber” with liens or judgments, and for which you may ultimately be responsible even when your co-owners fail to adequately participate, financially or otherwise. (Think High School group science project). Third, an attorney can advise you of the costs of buying out your co-owners or being bought out, including transfer taxes, an apportionment of real estate taxes, and other obligations which may affect the true value of what is being transferred, or at least your negotiations surrounding the transfer.

When an agreement just cannot be reached, such as when certain co-owners wish to sell their interests, and others do not, a partition action may be required. What is partition? Partition is a division of the property by the Courts — it is a legal and equitable “remedy.” There are two types of partition — partition in kind and partition by sale. Partition in kind involves an actual physical division of the property between the owners and is only considered where the characteristics of the property itself are conducive to co-ownership reflective of each party’s interests. Oftentimes partition in kind is not possible or practical, and partition by sale is requested. In this type of legal proceeding, the Court is asked to order the property sold and the proceeds equitably divided between the parties in interest.

Partition actions sometimes arise because of attorney negligence, and it is important to understand your rights should you be in that scenario. A common example is when one adult child brings his elderly parents to an attorney to transfer their property to that child while excluding the other children, leaving the parents with just a life estate. While in certain circumstances, this can be an effective estate planning tool or compensate the child who cared for the elderly parents, it can also be a result of undue influence, and it is critical that a conflict waiver be provided and/or separate representation altogether. Another example involves unmarried folks purchasing property together – oftentimes without equal contribution— and without separate legal representation. It is important to consult an attorney who can identify professional negligence in the initial transaction and determine whether it is best to include legal malpractice within the partition action or to wait until it is resolved.


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