What is a Partition Action?
If you co-own a property with others you have to be careful, because there’s a legal action your co-owners can use to force you to sell it. It’s called a partition action.
Co-ownership happens in a number of common circumstances.
- Multiple siblings inherit a property together.
- Divorce leaves two ex-spouses in control of a property.
- Multiple parties invest in the same large property.
The potential for disputes arises whenever and wherever there are two people in control of anything, and real estate is no different. For the most part these disputes can be managed simply by encouraging the parties involved to sit down and negotiate.
When the potential sale of the property is in dispute, however, things get a bit harder. If one party wants to sell and the other party wants to stay, things can get messy. In this case, a person can use a partition action to force the sale of the property if physical property division or voluntary partitions don’t appeal to them for whatever reason.
Physical property division is an option…sometimes.
When a property can be divided into two parcels things get relatively easy, though you’ll still need to involve real estate lawyers to draw up the new property descriptions. Once the properties have been physically divided the party who wants to sell their portion can do so.
There are disadvantages here, of course, namely that the original owner is left with a parcel that’s a lot less valuable. Still, this might not be a concern if the person who wants to stay is, say, living on the portion of the property they’ve been left with.
In cases where two parties can’t agree to a physical divide the court can force the issue by demanding both parties do just that.
Voluntary partitions can provide a status quo solution.
Sometimes voluntary partitions are the better part of valor, especially when both parties want to part ways amiably.
In this case, you’d agree that the party who wants to sell their share can. The disadvantage, in cases where, say, the whole property is owned by a family, is that they may end up sharing the property with a stranger, or an investment firm, who could cause trouble for them later. Maybe even immediately, if they want to acquire a share in the property just to force its sale.
In cases where all the owners are investors anyway, or where you’re dealing with an ex-spouse, this may not be such a big problem, though of course co-ownership will leave you a little vulnerable to partition actions. In many cases if a co-owner has the means to buy out the seller’s share doing so is going to be their safest bet.
Partition actions force the sale of the property.
A Partition Action essentially forces the dispute into court. The judge will usually grant the action and force the sale of the property.
All co-owners would then get their percentage share as a lump sum.
This can be a bad outcome for some co-owners, as it usually means they lose the property. If they’d had the means to buy out the bringer of the action they generally already would have done so.
That said, it is possible to defend against a Partition Action, especially now, since a new law now protects some families by limiting the forced sale of homes.
Whether you’re facing a partition action or hoping to initiate one, the matter is intensely complicated. Make sure you have a good real estate attorney by your side if it seems likely that you’ll become involved in one.