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Partnership Agreements and Partition Suits: What Your Clients Need to Know


When working with joint property owners in real estate, it’s important to know if a partnership agreement has been drafted.


This agreement is a contract outlining information about the relationship between property partners, including distribution of profits or losses, financial contributions, and property management.


For any joint ownership situation, partnership agreements are recommended. Without one in place, co-inhabitants choosing to separate are left without a roadmap for disposal or distribution of the property.


Partition Suits and What They Mean

Without partnership agreements, the most common course of action between joint owners of a property is a partition suit.


A partition suit is a lawsuit determining the outcome of property owned by two or more parties when the owners can’t agree on how to manage the property. This is a common occurrence when two family members, or friends who aren’t married, go in on a home together.


Eventually, one or more of the owners decides they want to leave or want the other party to leave. How does the property get divided?


Forced Sale and Additional Fees

The usual outcome of a partition suit is the selling of the property, followed by the division of the proceeds.


The division of funds depends on the ownership amount. Sisters who go in on a house together and split all costs and payments in half would each receive 50% of the divided income from the property.


Unfortunately, in a partition suit, the sale is usually forced, and the joint owners aren’t the only individuals receiving money from the sale. Attorney fees and other costs associated with the sale of the home need to be paid as well.


There are also cases where the joint owners haven’t contributed equally. In this case, the income from the sale needs to be divided based on the contribution to the owned property.


Developing a Partnership Agreement

These partition suit situations are exactly where a partnership agreement would have come in handy. There’d be no need for a suit at all.


The agreement is made while joint owners are still on good terms and dictates the fair distribution of property and assets should joint owners split. This contract can be changed over the years or dissolved entirely based on owner preferences. If the parties marry, the agreement can be thrown away because family law will control the distribution of the proceeds of the property.


Complications within joint ownership and partnership agreements are best handled with an experienced real estate law firm. Working with a lawyer in the know can save your client money and speed up the resolution process in a disagreement or partition suit.


The Minchella & Associates Difference


With over 40 years of experience in Illinois real estate law, Erica Minchella has represented thousands of home sellers and buyers, landlords and commercial and investment property owners. For more information, schedule a consultation today.


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