What happens when a deceased person left behind a partial interest in a property? Many people pass along an interest in a property when the property was co-owned with another person prior to death. In this case, the deceased person’s estate may become co-owner with the remaining owners of the property. What should be done when two or more owners of real estate disagree on what to do with a property? Properties subject to a marital divorce or a deceased’s will are resolved through divorce court and orphan’s court respectively. But there are many other situations where co-owners cannot agree on the use of a property.
Here are some common examples:
- co-investors/ developers who jointly purchased a property but now disagree on whether to rent or sell
- inheritance property that was re-titled in the name of the heirs but the heirs disagree years later on how to use it
- a property purchased by two people anticipating marriage but the relationship ended before marriage
- former spouses who kept a property jointly-titled after divorce but later disagreed on its use
Any person who co-owns property with another person has a right to have the property partitioned through the court. Partition can mean a physical dividing, or more often, selling the property and distributing the proceeds. A physical division is not appropriate for most properties. Imagine what would happen if the court ordered the division of a one-acre lot containing a single family home. For this reason, courts often order liquidation except for properties like large tracts of vacant land.
How exactly to divide the proceeds is the more difficult part.
Proceeds are rarely distributed simply based on ownership percentage. The reason for this is that the disputes leading to partition cases are fueled by one owner’s claim to a larger share than their ownership percentage. Suppose one owner wasted or neglected property, while the other invested substantial funds to improve it. The person who expended funds will want a greater share. Courts will entertain these “equitable” arguments about how to most fairly divide the property under the circumstances.
The good news for co-owners locked in a dispute is that most partition matters are resolved at mediation. A judge will make an initial decision whether the property should be partitioned. Then a person called a special master is appointed to hear arguments about distribution percentages, order appraisals, and more. Cases that go to trial are usually the most serious types of disputes.
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