It is not uncommon for family members, friends, or business partners to jointly own commercial or residential real property. With property values skyrocketing and Covid-19 allowing so many of us to work remotely, we saw a steep rise in the numbers of partners (romantic and platonic) who made the choice to jointly purchase real property, so that they can have the space to work remotely.
With property in high demand and interest rates at their lowest in years, many did not take the time to ask the question, “what happens if I can no longer stand living with this person?”
Most people find themselves in a situation where they have purchased property with a partner or long-time friend without a prior Shared Property Ownership Agreement that clearly sets forth the terms of ownership. You may have been so busy drafting the most appealing purchase offer and admiring the quartz countertops that you did not have time to consider how you would handle any ownership disputes or buyouts in the event your partnership relationship went kaput.
In situations where you are unable to amicably resolve shared ownership in real property, there are statutory remedies available to help resolve ownership issues. A “partition in kind” occurs when real property is physically divided amongst the owners. These types of partitions tend to occur when the disputed property is large enough to be split practically. A partition works best when there is ample land to evenly or reasonably divide the property into two similar or reasonably similar portions.
However, a partition in kind is not reasonably practical when the property in question is a townhome or single-family home with limited land. In such situations, you may be faced with a hard decision as to whether a buyout of the other owner’s interest is possible or whether a court-appointed private sale via an appointed referee is the best way to end the joint ownership and recoup your investment by capitalizing on the current market trends.[View source.]