The Partition of Property

What to Do When Co-Owning a Home Doesn’t Work Out

Image of a small pie that has been split in two pieces. Captioned: What to do when co-owning a home doesn't work.

What happens when co-owners decide not to co-own any more? if an owner wants to voluntarily come off the title, no problem. The co-owners prepare a new deed to convey that person’s interest, with a new title reflecting the desired ownership. And if multiple heirs who co-own a property want to sell it and divide the proceeds, then all they need is a buyer.

But what happens when two or more people with a shared a title or interest in a property disagree on how to handle their ownership — but no one wishes to relinquish an ownership interest to the other? Then both (or all) remain owners. Even if an owner previously “added” someone else to the deed, that second person has a right to continue owning.

Sometimes adult siblings or cousins reach an impasse on how to use an inherited family property. Partners in an investment venture might run into basic disagreements, such as whether to rent the property out or prepare it for sale. Family members might buy a house together, only to find their relationship gradually turning sour. If nobody will budge from their position, a change can only be forced through partition.

The partition of a property can be voluntary, or it can occur when one of the owners sues the other(s) and obtains a court-ordered partition.

Voluntary Partition

Voluntary partition involves a written agreement through which the property is relinquished a co-owner. All the property’s owners must be involved and all must sign the agreement. If there’s no way to achieve the partition on a voluntary basis, a judge will have to order it.

If a court orders a sale, no co-owner can call it off — although owners are allowed to bid on the property if it goes through a sheriff’s sale. The court may have provisions for owners to bid using credit based on their vested interests in the property.

But a forced partition action is contentious and costly and long. It’s best avoided. A court-ordered sale is unlikely to happen at the optimal time for anyone. It will involve steep legal fees and, probably, a low sale price. If there’s a mortgage, the owners will still have to pay whatever part of the loan the sale proceeds don’t cover.

Can the parties avoid these complications? Can they have the property appraised, draw up an agreement, and have one buy the other out for a fair price? If not, can they put the parcel up for sale and divide the proceeds according to the way their interests are vested on the title? In all likelihood, the first thing the court will do in a case for a partition is ask these very questions.

Courts also suggest mediation under the relevant provisions of their states’ laws. A mediator — a professional, neutral party who works with the co-owners to “get to yes”— might help tailor the outcome in a more appealing way than the court would, and save the owners a lot of time and money in the process.

Court-Ordered Partition

If it’s impossible for the co-owners to work through their differences, then the county court must effect a partition. Because the law does not want to force a person to co-own property who doesn’t want to, the partition should be granted if the plaintiff meets the state criteria.

There are very few exceptions to this general rule. In rare cases, a provision in a will could bar partition, or a written agreement could exist in which the co-owners expressly agreed not to partition the property. But if there are no exceptional situations, a court should grant the partition.

There are two ways for the court to order the partition.

  • A partition in kind (“actual partition”) divides the actual property among the multiple owners. The court may forgo appraisals, assess the property’s value, and assign the parties a specific portion of the parcel. Then, the individuals record their portions as their own properties with the county recorder of deeds. Of course, it can be difficult to divide real estate into equal sections. Moreover, it can leave the people holding parcels right next to each other — people who disagree so strongly that they just had a major showdown in court.  
  • The alternative is the partition by sale. State law typically states that partition by sale should happen it the actual parcel cannot be split up without substantial detriment to anyone involved. In this case, the court will order a sale of the entire property sale, possibly on the open market, but typically at a sheriff’s auction. Sale proceeds will be distributed to the owners, and taxed just as other real estate sales would be.

Expect the court to request surveys and appraisals if the property will be sold. In any case, the co-owners will need to show an accounting of their income from the property and any contributions they have made to the mortgage debt, the insurance and taxes, and the repairs and improvements, to ensure a fair distribution after partition.

There are notice rules to follow, to be sure all co-owners are aware of the lawsuit; the notified parties may have 20 days to respond. Check the state’s law and the county court procedures to learn the precise details applicable where the property is. Generally, the lawsuit must include the co-owners, and anyone else whose rights and interests could be affected. The plaintiff must identify the property at issue, the owners and their addresses, and all facts that should pertain to the outcome of the case. A financial institution with a mortgage lien on the property may participate in the hearing, and may be permitted to initiate foreclose during the proceedings.

To see one state’s handling of the procedure, visit California’s detailed provisions on partitions.

Each Case Is Unique

Going through a court case and coming out with new deeds and clear titles is an intricate process. The facts and documentation connected with each case is unique. Each person has a unique set of financial circumstances and hopes for the future.

The starting point is a consultation with a real estate lawyer admitted to the bar in the state where the property exists. This article is intended to help frame that discussion, and to show the benefit of seeking an agreement among the parties, difficult though it might be.

Supporting References 

Removing Someone from a Real Estate Deed, (March 12, 2019).

Manuel Farach, The Uniform Partition of Heirs Property Act: A Solution in Search of a Problem, The Florida Bar Journal (November 2018).

NC General Statutes – Ch, 46 Art. 2, §46-22, Partition Sales of Real Property.

Photo credit: Jonathan Farber, via Unsplash.