This article focuses on the remedy of "partition" available to co-owners of real property. It is used when a co-owner no longer wants to own the real property, but there isn't an agreement among the owners regarding how to dispose of the property. Take John and Jane for example. They were in a romantic relationship for several years before they decided it would be a good idea to strike it rich in the white-hot real estate market. Jane finds a beautiful condominium on the water. It was always her dream to have a beachfront condominium. Jane and John decide to buy the condominium together as an investment. They don't live together and neither can afford to live in the condominium since they need to rent it to make the mortgage payment. They take title to the condo in their individual names, as tenants in common. This means that they each own an undivided 50% interest in the condo. If one were to die, their 50% interest would pass to their heirs rather than the surviving co-owner.
Everything is going smoothly until the bottom falls out of the real estate market, the tenant moves out and Jane loses her job. John must now pay the mortgage on the condo himself. To make matters worse, the relationship between Jane and John is over, and it wasn't a pleasant split. John wants to sell the condo to cut his losses. Jane had visions of living in the condo during her retirement years and doesn't want to sell. She tells John that she will buy him out when she gets back on her feet. John doesn't want to wait. He wants out, but since Jane won't consent to a sale, what can he do?
John can file a partition lawsuit against Jane to force the sale of the property and to have a judge determine how much each party will get from the sale proceeds. In the lawsuit he states, in summary, that they both own the condo but he no longer wants to own it with her. In the partition action the judge will first determine what interest each party has in the condo. In our example, John and Jane each have a 50% interest. This means that, assuming each party has equally contributed to the property, they will split the proceeds of any sale. However, in our example, John paid some of the mortgage payments without contribution from Jane. Therefore, he is entitled to be reimbursed from Jane's portion of the sale proceeds. Assuming the condo can sell for $200,000 and John paid $18,000 in mortgage payments, the calculation would be as follows:
The above analysis applies to overpayments made by one co-owner for expenses such as taxes, insurance, etc. A co-owner can recover for improvements to the property too, but only to the extent they increase the value of the property. It is also important to note that the "sale" the Court orders is actually an auction where the property is sold to the highest bidder. This process rarely results in a fair market value sale. Therefore, parties to a partition action will often agree to market and sell the property in a private sale before the property is sold at auction.
