Joint Owners of Real Estate Want Out
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If Two or More People Jointly Own Real Estate Property and One Wants Out, Can that Person Force a Sale of the Property?
It is a common occurrence for individuals who are not married to own property jointly. This is generally known as holding property as “joint tenants” or as “tenants by the entirety”. In these scenarios, the property is held jointly and the ownership interests are not divided. That is, each owner has a percentage interest in the real property, but the land is not physically divided along those interests. In situations where the owners have differing views on what to do with the property, it can often lead to conflict. If the parties are unable to reconcile or work out their differences, they are forced to result to legal procedures to resolve the dispute.
Most states have a statutory procedure whereby one property owner can bring a legal action against a co-owner to divide an otherwise indivisible ownership interest. This type of legal action is known as a “partition” action. In this article, we discuss the use of partition actions to divide property accordingly.
A portion action is a legal action in which one of the joint owners of real property sues one or more co-owners for control or full ownership of the property. “Real property” includes land and anything permanently affixed to it.
There is generally an “absolute right” to partition when co-owners cannot agree on the use or disposition of property. That is, the court will generally grant a petition for partition unless there is some overwhelming concern that causes it not to do so. This may be the case when one co-owner is deceased and there is a last will and testament controlling disposition of the property. In that case, the court may defer to the probate court to handle the disposition. Courts are hesitant to give force and effect to clauses in a land owner’s agreement or deed that seeks to limit any co-owner’s right to partition.
There are two primary types of partition action. One is known as a “partition by sale”. The other is known as “partition in kind”. Partition by sale, as the name implies, is where the court requires the real estate to be sold. Once sold, the proceeds from the sale of the real estate is paid out based upon the priority of interest holders. Individuals holding mortgages against the property must be paid first. Any remaining funds after all debts using the property as collateral are paid are distributed to the property owners. The funds are distributed based upon each party’s ownership percentage in the property. It is also used when partition in kind is too difficult to execute, such as a lot or single-family home that cannot be appropriately divided. To protect the interests of co-owners wishing to maintain possession of the real property, the court may permit one of the co-owners to purchase the interest of the other co-owner(s) for fair market value. Partition in kind, on the other hand, is the physical division of the property. The court divides the property into distinct tracts of land and awards ownership of the land to each of the co-owners. Partition in kind is preferred by the court, as it allows the owners who wish to retain ownership of the land to continue to hold physical property.
In a partition action, the court will partition the property based upon a number of factors, such as title ownership, acquired rights, money or effort invested in the property, etc. Basically, the court will attempt to use law and equity to balance the interests of co-owners based upon these various factors. Even if incurring expenses as owning the property is not fully compensated, you can make claims against the co-owners for contributions made to the property. Such contributions may be, paying taxes, interest on loans, or other costs above your rightful share.