Land Held Hostage: Real Estate Partition, When All Else Fails
I almost made a really big mistake one time. My friend Gary and I found a piece of commercial property for sale near our offices. It was a nice place, in great condition, and offered at a fire-sale price. It was going to be sure thing, a moneymaker, a “great investment.” So we put in a contract for the property and started the process of getting financing for our new venture. We talked excitedly about exterior paint colors and potential tenants.
But, Gary dragged his feet on the financing. He just “never got around” to completing the paperwork. Gary wasn’t really good at that stuff. He was lots of talk, little follow-through. We got to the closing date and the deal fell through. I lost my share of the earnest money and learned a valuable lesson about keeping friendship and business separate.
Not everyone gets as lucky as I got with that deal. Sometimes, if you’re unlucky or unwise, you find yourself stuck owning a piece of real estate with someone else and no way out. And if you’re really unlucky, that someone else has a touch of crazy and can’t be reasoned with about disposing of the property nicely. Fortunately, the law provides a remedy for you. Enter the magic of equity. Equity is a legal remedy that is “not money.” Divorce, for example, is an equitable remedy. In equity cases, you are asking the Court to do something for you, not just award you money for your damages.
In the case of the property held hostage by your co-owner (cotenant), the equitable remedy is called partition. In a partition case (like in a divorce case), you are asking the Court to get you out of a bad relationship. The first step to a partition is like the first step of many legal cases: first, give notice to your cotenant that you intend to sue your bad roommate for partition. Then, after at least twenty days after serving the notice, you file a lawsuit doing just that. The possible outcomes of a partition action are: 1) a metes and bounds division of the property by a surveyor; 2) a buyout by one or more of the co-tenants at a price determined by the average value based upon three court-appointed appraisals; or 3) a public sale.
(Click HERE, for a sample Petition for Partition.)
Most of the time, we don’t actually have to take the case to a judgment for a division or public sale. Once served with a lawsuit and faced with the reality that this land-owning relationship is going to end, your cotenant will finally start to negotiate. Once we get that person to the table, you can start to finally unravel that regrettable real estate relationship.