What You Need To Know About Selling Jointly Owned Property
Jointly owned property can be put on sale once all the co-owners have provided their consent. In the event of a dispute, partition lawsuits are usually called upon as a last resort. A partition action may be filed by any co-owner at any point unless the co-owner has given up the right to partition in a contract. This is a measure of forcing a sale of the property upon co-owners who might not be on board with the idea.
Not only are partition lawsuits time consuming, but they are also expensive. The funds for these lawsuits and the accompanying legal fees are deducted from the sale proceeds before the amount is split among the co-owners.
Partition Lawsuit Process
The court intervenes either to divide the jointly owned property into distinct sections which are allotted to each owner or to order that the property is partitioned by sale. The court usually approves the sale price before the transaction goes through.
Sale proceeds of the property are divided among the former co-owners, but only after deducting certain fees and payments.
The following are deducted from the sale proceeds:
- Legal fees
- Property loans
- Other existing payments
Sale proceeds are usually distributed in proportion to the owner’s interest in the property. For example, if an owner owns 40% interest in the property, then that is the percentage of the sale proceeds that he can expect to earn.
Calculating Owners' Interests
Owners’ interests may vary depending on the advances and investments they have put forward in order to improve the property. What is important here is that these expenses have been made to benefit the property, and even increase its value. These expenses will be reimbursed from the sale proceeds before the amount is divided. The credibility of these reimbursements and credits are usually determined by the court.
In comparison, a voluntary sale of the property is an easier option, although getting each co-owner to agree to the terms and conditions might prove a daunting task. Co-owners under joint tenancies or the tenancy in common arrangement are treated as having undivided interests and are assumed to have an equal right to the property. These co-owners can give away their interest in a property or mortgage their share, but not that of their co-owners.
Married couples can opt for tenancy by the entirety – a contract which transfers the tenant’s interest to their spouse in case of death. However, this contract also binds them to become tenants in common if they divorce. This form of co-ownership cannot be dissolved by partition of property