A partition action forces parties to fairly divide interest in a property when the parties cannot come to an agreement, usually by the sale of the property. When the property under consideration is real estate, the partition will be settled either by a partition of sale or kind.
A partition action is never the best-case scenario, so this short guide is meant to help you avoid a lawsuit! For more on partition actions, see our previous post here.
Partition by Appraisal
The most rational form of partition for real estate is partition by appraisal, whereby the parties assent to have the property appraised by an agreed upon appraiser and to be bound to the value of the property as determined by the appraisal. Assuming the parties agree on their percentage of interest in the property, they then either sell the property and divide the proceeds or one party agrees to buy out the other. Once a partition action has been filed, a partition by appraisal agreement requires the parties to execute and file an agreement with the court, and then allow an agreed upon real estate agent to sell the property or allow the court to appoint an agreed upon referee to appraise the property and report the appraised value to the court.
Unfortunately, most partition disputes end in a partition by sale. If the parties cannot agree to partition by appraisal, then they must make recourse to partition by sale, which requires a lawsuit to force a sale. This hands over to the court the responsibility of determining how the property will be sold, whether by private sale or public auction. After expenses and liens, the parties then split the proceeds equitably according to their interest, but taking into account court costs and the inefficiency of the whole process, the parties can expect to receive far less than if they had come to an agreement.
Partition by kind does not usually apply to real estate, since this would divide like objects, and if the parties owned two perfectly identical properties to divide between them, it’s unlikely that a partition action would be necessary at all. However, an undeveloped plot of land could be parceled off between the parties in this manner.
Settling the property dispute outside of court through a cooperative appraisal and sale is by far the most desirable option. It is a good idea to consult with a real estate attorney about partition disputes and allow rational decision making to hold sway, rather than allowing emotion to waste time and money on a partition by sale.