Breaking Up (A Property) Is Hard to Do: Understanding Common Real Estate Partition Actions

Dec 27, 2023 | Real Estate Law

Real estate ventures don’t always happen according to plan. At times, co-owners of a property find themselves in conflict, unable to reach an agreement on how to handle their shared investment. In cases of divorce, the death of a partner, or other circumstances where the co-owners are unable to agree on the future of the property, a partition action may be necessary for resolving the dispute and ensuring equitable division of the property.

As in all matters of legal dispute, it is always best to consult with an experienced attorney to understand your options and how to proceed with a partition action. However, here are some basic things you should know if you find yourself facing a real estate conflict!

What Exactly Is A Real Estate Partition Action?

A real estate partition action is a legal process that enables joint owners of a property to seek a court order to divide the property among themselves. It is typically used when co-owners are unable to agree on how to manage or dispose of the property. By filing a partition action, an owner can force the sale of the property and receive their fair share of the proceeds, or they can choose to physically divide the property if it is deemed feasible and equitable.

Common Reasons For Real Estate Partition Actions

Individuals may choose to file a real estate partition action for a variety of reasons. A breakdown in the relationship between co-owners is one of the most common reasons. For example, in the event of a divorce or a bad business relationship, joint owners may find it hard to continue sharing ownership of the property. Another typical cause is a dispute about how the property should be utilized or maintained. One co-owner may choose to sell the property, whereas the other may wish to keep it for personal or financial reasons. These differences may soon escalate into heated confrontations, forcing the involvement of the court via a partition case.

Types Of Real Estate Partition Actions

There are two main types of real estate partition actions: partition in kind and partition by sale.

1. Partition In Kind

In a partition in kind, the court physically divides the property among the co-owners. This is typically done when the property can be easily divided without substantial loss of value. For example, if the property consists of multiple units or parcels of land, each co-owner may be awarded a specific portion.

Obstacles to Partition in Kind Actions:

A property partition in kind action refers to the division of property or assets among multiple owners or beneficiaries. While it can be an effective way to distribute assets, it also presents some challenges:

  • Property valuation: Assessing property or asset value is challenging due to varying complexity, market volatility, and sentimental value, making it difficult to determine fair distribution.
  • Dividing unique or hard-to-divide assets: Dividing family businesses, real estate properties, or sentimental items can be challenging and potentially lead to disagreements and potential disputes.
  • Ownership disputes: Disputes over property ownership can be challenging due to competing interests among multiple owners, making it difficult to reach an agreement and claim ownership rights.
  • Tax implications:The tax implications of asset partitioning can be complex and require professional expertise to ensure compliance with laws, understand property transfers’ implications, and minimize tax burdens.
  • Emotional and personal attachments: Emotional factors, such as personal attachments or sentimental value, can complicate property partition processes, potentially leading to resistance to equitable distribution.
  • Inequality of assets: Obtaining an equal distribution of property among beneficiaries can be challenging due to asset nature and value, and ensuring a fair division considering individual circumstances and needs can be challenging.

Resolving these challenges often necessitates open communication, collaboration, and the involvement of professionals such as lawyers, mediators, and financial advisors to facilitate the property partition process.

2.  Partition By Sale

In a partition by sale, the court orders the sale of the property and the division of the proceeds among the co-owners. This is the most common type of partition action and is used when the property cannot be easily divided or when the co-owners prefer a clean break.

Obstacles to Partition by Sale Actions:

Property partition by sale refers to the process of dividing property or assets by selling them and distributing the proceeds among the owners or beneficiaries. This approach comes with its own set of challenges:

  • Fair market valuation:The accurate valuation of property for sale is crucial for fair market value, but disagreements can arise regarding the appropriate valuation method or chosen appraiser.
  • Market conditions and timing: Selling property involves considering market conditions and timing, influenced by demand, economic trends, and local real estate conditions, to maximize value, especially in volatile markets.
  • Potential conflicts of interest:Conflicting interests in the sale process can complicate the process, leading to disputes over timing, pricing, or terms, making it challenging to resolve and maintain transparency.
  • Property preparation and maintenance: Property preparation can attract buyers and increase sale price, but coordinating efforts among multiple owners, especially those with differing opinions, can be challenging.
  • Decision-making process: Collaborative decision-making among owners or beneficiaries can be challenging, especially when disagreements arise regarding listing price, acceptance, negotiation terms, and selecting a real estate agent or firm.
  • Tax and legal considerations: Property sales require careful tax and legal considerations, necessitating professional guidance to understand tax implications, ensure compliance with laws, and address legal complexities.

These challenges highlight the importance of effective communication, collaboration, and seeking appropriate professional advice to navigate the property partition by sale process successfully.

Points To Ponder Before Filing A Partition Action

Before deciding to file a real estate partition action, it is important to consider a few key factors that may influence your decision and help guide you to a successful resolution.

  1. Financial implications: Court fees, legal fees, and other expenses can quickly add up in partition actions, which can be expensive.  You should weigh the potential financial benefits against the costs involved to determine if it is a viable option for you.
  2. Emotional toll: Going to court can be very hard on your emotions, especially if you are fighting with family or close friends. Think about how the process might affect your relationships and health as a whole.
  3. Alternative Options: Real estate partition actions should only be used as a last resort. Looking into other options, like mediation or negotiation, might be a better, less expensive way to settle the disagreement.

Hire A Real Estate Lawyer For A Smooth Transaction

A real estate division case can seem intimidating due to its complexity. It is therefore highly recommended that you work with an experienced real estate attorney to help you through this challenging process. A skilled attorney has the knowledge and experience to educate you on your legal rights, assess the viability of launching a partition case, and effectively argue for your best interests. Additionally, they are very good at negotiating, which they may use to help you while also looking into other ways to settle the dispute besides going to court.

Give us a call at The Law Offices of Patel & Cardenas today to schedule a free consultation and let us help you put the stress of the situation behind you!

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