Joint Property Ownership, Property Ownership Agreements and Partition of Real Property
Owning residential real property with another person can be rewarding but also challenging or difficult in certain circumstances when property owners cannot agree on the maintenance or disposition of the property in the event of a dispute between the property owners. Outside of a spousal relationship, there are various reasons and scenarios for joint property ownership, including distribution of estate property to family members under common ownership, owning real property with other persons for investment purposes and owning real property while in a non-marital relationship to name a few.
When more than one person owns real property under joint ownership, the owners of the property will take title to the real property as joint tenants or as tenants in common. When joint owners of real property own a property under joint tenancy with rights of survivorship, when one of the owners dies, the other joint tenant becomes the owner of the entire property. Conversely, when owners of real property take title to real property as to an undivided percentage of the real property as tenants in common, each of the owners of the property will own the real property as to a certain percentage of the property with all the owners having an equal right to possess the entire property.
Unfortunately, although most individuals enter into joint ownership of residential real property with another with the best intentions, inevitably, disputes can arise between family members, friends and persons in a non-spousal relationship during the parties’ common ownership of the residential real property. When disputes arise regarding how the property should be maintained, repaired or sold as between the owners of jointly owned real property, unless the parties can ultimately agree to the terms in dispute or compromise on a path to terminate the parties’ common ownership of the property, the parties will be forced to pursue litigation to have the courts determine the disposition of the real property and allocate the proceeds of any sale based upon the contributions of the parties over the time of the parties’ joint ownership, unless the parties already have an agreement in place to control the parties’ joint ownership responsibilities and disposition of the real property in the event one or both of the parties seek to terminate their joint ownership of the real property with the other owner(s).
Property Ownership Agremeents
In order to avoid lengthy and costly litigation in the event of a dispute as amongst common owners to real property whereby the parties are unable to amicably determine the disposition of the property, parties planning or intending to purchase real property together under joint ownership may pre-determine by agreement or contract the parties’ respective ownership interests, obligations, usage and contributions with respect to the real property, including but not limited to: what happens if one or both of the parties seek to terminate their joint ownership in the real property with the other owner(s); how the proceeds of a sale of the property would be distributed to the owners in the event the property is sold; and who gets to retain possession of the property in the event the parties are unable to continue to reside in the real property together pending the disposition or sale of the property. In summary, property ownership agreements allow joint property owners to pre-determine the rights and obligations for common owners of residential real property prior to purchasing a property so that the parties may avoid litigation, thereby significantly reducing the parties’ costs and exposure in the event that the property owners later disagree with each other regarding the rights and obligations of the owners with respect to the property, or the property’s ultimate disposition.
In the event that residential real property is owned by common owners whereby the owners cannot amicably agree to the disposition of the property in the event of a dispute, or where the joint owners have no property ownership agreement to rely upon for disposition of the property, generally, the only viable choice left for the common owners of the property is to request that the courts statutorily partition the real property.
Statutory Partition Action
Pursuant to Colorado statute, any person with an interest in real property under common ownership may maintain an action to partition the real property whereby the court will undertake a complete adjudication of the rights of all parties in the action with respect to the property, including the parties’ contributions, expenses and upkeep for the property. In the event the property cannot literally be split in parts for its common owners, the court may order the sale of the property at any time to promote the ends of justice necessary to reach an equitable result, whereby the parties’ contributions to the property will be allocated between the parties and the proceeds of sale split accordingly.
Despite a partition of real property always being a statutory option for a joint owner of real property to terminate his/her interest in the real property, a partition proceeding is litigation, and therefore, the partition action will require substantial more time and money for both parties, whereby neither party will be entitled to an award of their attorney fees and costs.
If you need assistance with the preparation of a property ownership agreement to pre-determine the rights and obligations for joint property owners prior to purchasing real property under common ownership, or if you currently need to pursue a statutory partition action to determine the ownership interests and disposition for certain real property in dispute under common ownership, please contact our office to speak with an attorney about your circumstances and options.
