Whether the result of basic estate planning, a joint investment, or a deliberate decision, the joint ownership of a single property by multiple people is fairly common. There are essentially countless reasons for two or more individuals to own real property together, not the least of which help cut costs and ease burdens.
Equally as numerous, however, are the reasons someone may want to sell their equitable interest in a property. While there’s absolutely nothing wrong with selling, problems may arise when owners disagree on what to do with the subject property. Thankfully, there’s a way to settle the impasse: a partition action.
A partition action may help solve disagreements between co-owners, leaving us with an important question to answer: What is partition action? For an in-depth answer to the question, and to make things a little easier on your own journey, please keep reading. Our partition action guide is designed to cover everything you need to know, including:
What is a partition action?
Partition action is the legal process by which a court is called upon to divide (or part) the equitable interest in real property amongst co-owners who can’t unanimously decide on what to do with the asset. In other words, a partition action is the court-ordered act of breaking the stalemate between co-owners who want to sell their equity in a home and those who don’t want to sell at all.
When two or more co-owners have conflicting opinions on how to manage real property it is hard to come up with a resolution. If for nothing else, everyone with equitable interest in a home has the right to have their opinion heard. With that right, however, comes the potential for a standoff nobody can win. If neither side is willing to give in, the owners must seek outside help; that’s where the right of partition comes into play.
In its simplest form, a partition action is a civil lawsuit brought against the owners who don’t want to sell by the owners who do want to sell. The case will enlist the services of a judge, who will use the information presented by each side to make a final decision. Depending on how the case unfolds, the judge may rule in favor of the owners who want to keep the home or recommend the forced sale of property through one of three types of partition action.
Types of partition actions
As the largest asset class in the world, real estate has become synonymous with variety and scale. With assets ranging from single-family homes to commercial warehouses, real estate comes in all sorts of shapes and sizes. As a result, not all partition action cases brought before the court can rely on the same resolutions. Instead, the legal system has developed several types of partition action processes to meet the needs of the public:
Partition in kind: While its name may not suggest as much, a partition in kind is ordered by the court when the asset in question is physically able to be divided and distributed amongst each owner. Since real estate is difficult to physically split (or impossible in certain scenarios), partition in kind is usually reserved for empty or raw land. When a partition in kind is ordered, the land isn’t simply split into equal sizes, but rather equally equitable portions; that way owners can rest assured the land they receive is the same value as their counterpart’s portion.
Partition by sale: When partition action in real estate is unable to physically split the property, the court will typically resort to a partition by sale. As the name leads you to believe, a partition by sale will order the home to be sold, only for the proceeds to be divided amongst the co-owners, relative to their equitable interest.
Partition by appraisal: Courts may resort to a partition by appraisal if at least one party is willing to maintain ownership of the asset. Consequently, the owner interested in retaining control of the asset will buy the others out. Instead of setting an arbitrary price, however, the court will appoint a third-party appraiser whose impending valuation will serve as the official price.
Who can seek a partition action?
Any and every co-owner of property (real or personal) has the right of partition for action. To be perfectly clear, partition action isn’t a privilege granted to those who are more fortunate; it is a legal right. Therefore, anyone who shares ownership in a single property has the right to seek the court’s aid. The right to seek partition action is even granted to co-owners of real estate subject to a lien, easement, or lease. While additional entities may complicate the process, co-owners are entitled to partition action.
What is an example of a partition action?
Let’s say, for example, two children inherit their parents’ home in a final Will. Legally, both children have equitable interest in the recently inherited property. Consequently, they may choose to do whatever they want with the home, provided they can agree on the outcome. In the event both children would like to sell the home and split the proceeds, they are more than welcome to do so. They may also choose to rent the house out to generate another stream of income. Whatever the children decide to do together is perfectly acceptable, as long as it fits within the parameters of the law.
Not surprisingly, heirs don’t always agree on what to do with an inherited property. In our example, one child wants to sell the house to pay down bills and the other is more inclined to keep it for sentimental purposes. Both want to do something different with the home, but can’t because of the other’s equitable interest. The desires of each child essentially come down to a standoff. Fortunately, each heir has the right of partition on their side. Whether selling inherited property or keeping it, heirs have the right to fight for what they want.
With no side willing to give in to the other, the child who would rather sell the home seeks the help of a partition lawyer. The lawyer will take the case to court where a judge will decide what to do with the home. Only once enough information has been gathered to make an informative decision, the judge will rule what to do with the property. If the judge rules to sell the home, they may conduct a partition by sale. In doing so, the home will be sold and the proceeds will be distributed evenly between the two children.
Commonly asked questions about partition actions
Not unlike most legal matters, a partition action may sound complicated to those on the outside looking in. However, the process doesn’t need to be as difficult as many make it out to be. In fact, all you need to do is ask the right questions if you want to become more familiar with the process. Here are a few questions you’ll want the answer to before considering using partition action in real estate matters.
What are the documents required for a partition suit?
The documents required for a partition suit will depend on the attorneys representing each side. With that in mind, partition lawyers will require any document to make their jobs easier. More often than not, that means documents relating to the ownership of the property are of the utmost importance. The grant deed and trust deed will swerve as the foundation of any legal representation. However, lawyers will also want to see liens levied against the home, title reports, claims to ownership, and anything else that may be useful in making their case.
How much does a partition action cost?
The cost of a partition action will vary greatly from case to case, and even state to state. Regardless of the case specifics or the state in which the process takes place, the overwhelming majority of the costs associated with a partition action will come in the form of attorneys’ fees. However, additional costs include filing and court fees, renovation expenses to sell the home, and other selling costs. Depending on the complexity of the case, the property itself, and the resistance of subsequent co-owners, legal fees can run anywhere from $20,000 to $100,000 (or more). Costs are so exorbitant, in fact, that most people decide to settle out of court through mediation.
There’s no doubt about it; the process is costly, which leaves a lot of people asking the same question: Who pays for partition action? Typically, the costs of partition action fall on each party. Each owner is usually responsible for their own attorney’s fees, but the court may apportion remaining costs amongst the owners in proportion to their interest.
How long does a partition case last?
A partition action is a lengthy process. While there are certainly exceptions, most cases brought to court will take anywhere from one to two years. The length of a case is entirely dependent on its own unique variables. The complexity of discovery, the opposing trial attorneys, bureaucratic obstacles, funding, and court scheduling issues all play a role in how long the process takes.
How do you beat a partition action?
In order to beat a partition action, you must first decide what constitutes a victory. Winning a partition action case is nothing less than relative. What one co-owner may consider a win, another may view as a defeat. Therefore, in order to win, you need to set a goal. If your goal is to sell the house and collect the proceeds, the force sell of property is the best outcome. However, it is important to keep things in context. While selling the home may net you a little extra capital, it may not be worth the attorney fees or hurting any existing relationships. The terms of winning a partition action are unique to everyone and every case. You will need to decide what you want out of the case before it begins.
How can I stop a petition to partition?
While it is possible to stop or challenge a partition action, it is exceptionally rare. In fact, the only thing that can stop an action to partition is evidence of fraud or duress; outside of that, a partition action can’t be stopped once filed with the court. It should be noted, however, that the case can be dropped if the parties can resolve the dispute by settling out of court. While not the same thing as stopping a partition action, settling is another means to an end.
Can you be forced to sell a jointly owned property?
Any co-owner (minority or majority) can be forced to sell a jointly owned property. If the court rules in favor of a sale, there is nothing either side can do (unless they settle out of court). The forced sale of property will proceed under the court’s supervision, ultimately resulting in the equity being distributed evenly between co-owners. While it may not seem fair to the party who wants to keep the home, it is equally unfair to force the ownership of a property on someone who doesn’t want it.
How do I seek a partition action?
Not unlike most legal proceedings, the process begins when one of the owners files a partition complaint. Once the complaint is filed with a court, subsequent owners will receive news of the impending partition action. The mere threat of a partition action may lead co-owners to settle outside of court. However, if an agreement can’t be reached in mediation, the right of partition will proceed like a civil lawsuit. Both sides will present their case to a judge who will render a decision regarding the property.
Depending on the type of property, a judge may appoint a partition referee who simultaneously manages the asset during the process and provides valuable insight for the court hearing. The judge may inquire about anything from accurate valuations to other information that may aid in making an informative decision.
Update your estate plan to reflect property wishes today
On the surface, partition action is a legal process used to help settle discrepancies between co-owners of real property. Beneath the surface, however, partition action is a right granted to anyone who would rather sell their equity in a home than keep it. As a result, the right of partition can be instrumental in everything from an end of life plan to improving liquidity.
While the process can be intimidating, there’s no reason to go through it alone. Here at Trust & Will, we’re here to help keep things simple. You can create a fully customizable, state-specific estate plan from the comfort of your own home in just 20 minutes. Take our free quiz to see where you should get started, or compare our different estate planning and settlement options today!
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