When you own land with someone else and you stop getting along with that person, what can you do? Especially when someone owns a large piece of investment property with someone else, it can be very difficult to figure out how to work with someone who doesn’t want to spend the money to keep the property up or who doesn’t have the same vision as you do for the future of the property. Here are two ways that you can handle a real estate dispute with a co-owner:
1. A Written Agreement Between the Parties
The most obvious and best way of approaching a problem like this is a written agreement with your co-owner that clearly lays out the responsibilities of each party. Whether the property is making money or not, a written agreement can help to clarify how much money each party is required to put into the property and how profits will be split up.
You might think that a 50/50 agreement is the simplest way to handle something like this but often, it’s not. Perhaps one party is willing to make the financial investment into the property to clean it up or improve it, but expects a higher percentage of the returns in exchange. And what do you do if one party wants out during an up year for the property? How much do you have to pay them? Can one owner force the other to take a fair buy-out offer?
Drafting a clear agreement means thinking about possibilities that you may not want to consider, but in our experience, figuring this out now will save you pain and money down the line. Indeed, just having an agreement sometimes helps avoid breakups and keeps all parties involved happy with the investment that they’re making in the property.
2. A Partition Action
Unfortunately, many parties don’t start talking about these issues until a conflict has already arisen. If you’re in this boat, don’t panic! There is still a legal way to get out of the situation. In this case, you can either divide the property in two, or have a court order that it be sold and have the profits of the sale split between the owners.
How do you split a property in two? You can do this by reviewing the technical drawings for the buildings or property and agreeing to a line drawn through the property along an appropriate dividing line. In some cases, the parties can agree to give a valuable but small piece to one side and leave a larger but equally valuable piece to the other party. This process typically involves lawyers, appraisers, real estate agents, and brokers to find the proper balance.
But in many cases, the best remedy is for the parties to agree to sell the property. But what if the other party doesn’t want to sell? What if they think that the status quo is working out just fine? Or, what if vindictively, they just want to keep you from benefiting from the property?
In that case, you can petition a court for an order to sell the property in lieu of having it partitioned. In other words, if you prevail in proving that the property is not going to be usable or valuable if it’s split in two, you can have a court order the property sold the open market. At that point, they’ll usually come to the negotiating table. If they want to keep the property, they’ll have to put up fair market value for your half.
Trust an Experienced Real Estate Attorney with Your Concerns
If you have a problem like this with real estate, you should contact an experienced real estate attorney. Partition actions can be complicated, and there are many issues to consider. If you have questions about your situation, contact Cornerstone Law Firm, and let’s discuss how we can help you.