When one of your clients decides to purchase a property with another person--whether it is a spouse, friend, or family member--they are opening themselves to potential challenges in the future. As with any relationship, property ownership between two or more people is challenging because there is no way of knowing how life situations might change.
When faced with differences of opinion, negotiations can get emotional and even impossible to resolve. When a stalemate occurs, there is a legal solution: a partition action.
Here’s what you need to know about partition lawsuits.
What is a Partition Lawsuit?
Utilizing a “Petition to Partition” is a legal action that any owner (other than against a spouse) can take when they encounter a standoff on how to proceed with the use of a shared property. A suit is filed by one or more of the owners and delivered to non-plaintiff owners to start the litigation process and hopefully allow for successful negotiations. It is a last resort and an expensive solution, but it is intended to be the best way to ensure all parties are treated fairly.
Types of Partition Actions
There are basically two types of legal partitions of land ownership in Illinois you are likely to come across:
1) Actual partition: This partition works well in cases where the two parties are still amicable but just can’t seem to come to an agreement. It serves the interest of each joint owner, so they end up controlling an individual, divided portion of their property. The result is what is referred to as a “conscious uncoupling” with each person having their own piece and records their new ownership with the county clerk. 2) Partition by sale, limitation, or succession: Any of these terms will do, but it is most commonly referred to as partition by sale. This is the last resort for parties that no longer get along and cannot manage to resolve their issues. In this case, the entire property is sold, and the proceeds are divided among the owners. This is harder on the party who didn’t want to sell as they have no choice but to do so.
What If An Owner Doesn’t Want Partition?
In general, if both parties agree to split their land, it is considered a voluntary partition. However, it becomes a partition lawsuit when one of the parties is not agreeable to splitting the property. This requires a court-ordered partition where the party who wants to split the property files a lawsuit using a real estate litigation attorney to request a forced partition.
Defenses Against Partition Lawsuits
If your client does face a partition lawsuit or wishes to pursue one, it is important to know that there are almost no defenses that can be used to stop the partition. There may be delay tactics, but the court will ultimately order the sale, either as a conventional transaction helping the parties choose an appraiser to determine the value for the sale of the property, the broker for the listing of the property and, if necessary, signing the deed for any recalcitrant party. The court may also decide the amount to which each party is entitled upon sale. The costs of the partition action--attorney’s fees for plaintiff’s counsel, appraisal and costs of closing--will be taken off the top before there is a distribution to owners.
Partitions are Favored By Courts
Because partitions are a right, they can be used at any time. There is no need for a contract between the two owners that allows for partition. Since it is a legal right for all owners, courts often rule in the favor of the owner seeking partition.
Limiting the parties liability
One of the best ways of limiting the costs associated with a partition action is to have a Partnership Agreement from the inception of the purchase. This allows the down payment, payment of the mortgage, maintenance, and other expenses to be captured and properly attributed if the parties decide to split up the property.
Where We Come In
Brokers should know that a real estate attorney is an excellent resource in these cases. Erica Minchella has almost 40 years of experience in Illinois Real Estate law, including the representation of clients in partition suits. Get started by scheduling a consultation today.