You and your soon-to-be spouse buy what you think isgoing to be your forever home. You and your buddy buy an investment property. You and your brother inherit your parents’ house. Then you get into a relationship-ending fight. Your fellow co-owner wants nothing to do with owning the house with you, and you’re left wondering: who gets the house?
Well, it’s just like mom said when you and your sister couldn’t agree on a TV channel to watch: “If you guys can’t agree on a channel, no one gets to watch TV.” Similarly, if you can’t agree with your co-owner on what’s going to happen with the house, then mom, I mean the judge, will order the house to be sold Accordingly, the house would be disposed of in accordance with the rules of Partition.
WHAT IS A PARTITION?
I’m glad you asked. Not only is Partition a song by the great Beyoncé herself, but it is also a legal tool you can use to force the sale of your home when you and your co-owners cannot reach an agreement on the house’s destiny.
The general rule for a Partition action is, if two or more owners cannot agree on how to dispose of a jointly held house, that house will be sold at auction with the sale proceeds being distributed based on each individual’s ownership interest and monetary contributions to the acquisition and maintenance of the house By way of example: you and your girlfriend buy a house together.
You get into a huge fight and break up. You both want out of the house. She brings a Partition action against you demanding the sale of the home. Assuming you both put the same amount into the house and equally contributed to maintenance and repairs, upon the sale of the home, the proceeds would be split 50/50.
APPORTIONMENTS- I PUT MORE INTO THE HOUSE
Now. most cases are not so cut and dried. In cases where one party has a greater ownership interest in the property or has contributed more to the down payment or property upkeep, the distribution of net proceeds will need to be adjusted accordingly. In that case, a referee will be appointed to take testimony, evaluate the evidence and determine the adjustment.
OUSTER- I WAS FORCED OUT OF THE HOUSE
Things get even more complicated if one co-owner forces out or “ousts” the other co-owner. This legal principle of “ouster” can occur in a situation where your fellow co-owner changes the locks and doesn’t allow you back in. In this situation, the ousted co-owner would be entitled to reasonable rental value of the property. On the other hand, the occupying owner will get a credit for paying the mortgage and other carrying costs.
Let’s take another example. You and you friend, Jay, own a house. You guys get in a fight, and, in his anger, Jay changes the locks while you’re at work. He refuses to let you back into the house and tells you to “go live on the streets for all I care. You put $50,000 into the house; Jay put nothing. You sue Jay for the Partition of the house.
Jay’s as stubborn as your old uncle Kenny and is not open to a buy-out, nor will he voluntarily agree to listing the house. He is going down with the ship. In such a situation, the judge will order a forced sale. You will get your $50,000 off the top of the net sale proceeds plus reasonable rental value for the time lav locked you out, reduced by any payments he made. The remainder of the net proceeds will be split 50/50.
WRITTEN AGREEMENT- HOW TO AVOID A PARTITION PROCEEDING
The rules above only apply if there is no written agreement between co-owners regarding homeownership in the event of a falling out. Our best advice when buying a house with another person is to execute a written agreement. Doing so will ensure you avoid the time and expense of what can be a costly and drawn-out Partition proceeding.