Partition by Sale
What does Partition by Sale mean?
Partition by sale, also referred to as a partition by succession, allows property owners to sell property owned by multiple parties and divide the proceeds from the sale.
Proceed distribution following the sale is determined by the court. The court, however, will first ensure that all expenses related to the property, including any outstanding liens, are paid prior to the distribution of the profits. Proceeds may be divided equally, or if one owner has invested more heavily in the property, they may receive more compensation after the sale.
Property by sale is generally only used if the property cannot be separated. For example, if the property can be separated or divided any owner could simply file an action for or partition in kind (also referred to as partition by division) and have the property divided so each party could keep or sell the land they own as they desire.
Avoiding a partition by sale
Issues involved with a partition by sale most frequently arise when two parties have been given property. For instance, a brother and a sister may have been left with the family home following the death of their parents.
If one party wishes to sell the house and the other does not, property laws generally favor the person(s) who would like to sale the house. In fact, in most cases they can force a sale through a partition by sale. In some cases, the action may require a court order to force the sale, in which case the filing party may need to hire a real estate attorney who understands real estate litigation.
With that said, however, avoiding a lawsuit is advisable. Lawsuits are expensive, and there is generally is no defense to avoiding a partition by sale. In some cases it may be best to have an attorney write a letter to the uncooperative co-owner, which outlines state laws related to partition by sale, prior to the filing of the partition action.
Another way to avoid a partition by sale and litigation is to allow the party who wishes to keep the house purchase the home from the other co-owners. An appraisal should first be done to determine the sale price, but if the co-owner can afford the property this could be a win-win for all parties.