Dealing With Real Estate Co-ownership Disputes

By Author: Boyd Rankin
Total Articles: 77
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When two or more persons jointly own a property, generally disputes arise for following reasons:

• If one owner is in sole possession of the property and refuses to pay a rent for the share owned by the co-owner.

• One owner refuses to pay his/her share of the expenses incurred for the maintenance of the property

• Disagreement on management issues

• There is no agreement on how the property should be handled in the future - whether to sell it, lease it or hold onto it.

Disputes also arise over who should live in that property and if one person wants to buy out the property, then how much amount should the settlement be made for. The most common disputes arise between live-in partners who are separating, siblings inheriting family property, and business partners who are winding up the business. The confrontation, especially where family is involved, becomes very sensitive, and is difficult to resolve amicably since the members get emotional.

In the state of California, a partition action may be filed to divide the interests of the co-owners other than spouses; while for married ...
... couples, the property disposition is a part of the marriage dissolution process. If both parties are unable to come to an agreement, then the court simply orders the property to be sold and the net proceedings are divided as per the interests held by them. The expenses related to the sales proceeds are deducted from the sales proceeds before equitable distribution between both parties. Here, the attorney fees, real estate commission etc. can be a major cost. Further, even if one of the members wants to buy out the property, they might not receive a fair deal. A negotiated settlement agreement is much more feasible and saves both parties thousands of dollars in litigation-related expenses. Approach an attorney who is experienced in handling co-ownership property disputes to guide you to make a better out-of-court settlement deal through mediation.

If the other co-owner of the party refuses to come to a logical conclusion towards the termination of the ownership, a person can even resort to filing a partition petition, whereby the court will order the sale of the property and distribute the net profit 50-50 between the co-owners.

Partition action happens in two ways:

• Physical division of the property between the co-owners

• Ordering the property to be sold via private or public auction

Further, if either one of the owners wants to keep the property, they may become one of the bidders and bid the highest amount for the property sale.

Partition actions are time consuming, emotionally stressful and expensive for both owners. It should be treated as the last resort and filed only when neither party is able to come to an agreement.

In addition to the attorney fees, partition action costs including filing fees, surveyor fees, referee fees, title policies, which will be allocated between all co-owners by the court as per the ownership interest held by them.

If there is an agreement specifying the percentage share each co-owner owns in the property, then the matter is settled accordingly. Where there is no such arrangement mentioned in the deed, the property is distributed equally among all the co-owners.

If the parties are not related and formalized their agreement regarding the property when they purchased it through an operating agreement, partnership agreement, tenancy in common agreement, a corporate buy-sell agreement, or any other agreement, then the agreement can be referred to for the termination clause to understand the rights and obligations of each party.

In any case, it is important to employ the services of an experienced attorney to guide both parties to get the best settlement deal.

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