To partition or not to partition, that is the question. Partition is a legal action instituted for the purpose of dividing real estate owned by two or more people. If one or more of the co-owners of real estate is or are unwilling to sell the property and divide the proceeds of sale in accordance with all of the co-owners’ ownership interests, it is the only way that a person who owns a share of real estate as a tenant in common or joint tenant can separate his or her interest from the other co-owners.
A joint tenancy is a form of ownership in which the co-owners own a property equally. If one dies, the other automatically inherits the entire property. By contrast, a tenancy in common is a type of joint tenancy of property without right of survivorship; each co-owner’s portion is distributable under a will. Thus, in a tenancy in common each can leave his or her interest upon death to beneficiaries of his choosing instead of to the other owners, as is required with joint tenancy. The type of ownership is determined by reading the description in the deed. In New Jersey, two people, other than married couples, are presumed to own property as tenants in common unless they’ve agreed otherwise in writing in the deed. If two or more individuals inherit property then the last will and testament of the decedent will specify the type of joint ownership.
Partition of real estate can be in kind, meaning that the property is actually physically divided and split up among the owners. If that is not possible, and it most commonly is not possible, then a court ultimately will order a public or private sale of the real estate and the division of the sale proceeds among the parties according to their respective interests. Thus, it is common, and often in the parties’ mutual best interest, to work out a deal in which one co-owner buys out the other(s).
A real estate attorney may have to file partition actions between parent and child, brother and sister, boyfriend and girlfriend and gay couples. When a married couple owns property and seeks to end the marriage and divide the property, the case will be heard in the Superior Court, Chancery Division, Family Part, as part of the divorce. For all other co-owners of property there is no other recourse than to file a Complaint in the Chancery Division, General Equity Part. Partition is an equitable remedy so the Chancery Judge will hear all the facts and make a decision based on equitable factors.
These matters are usually very emotional because not only do they signify the end of a joint ownership of property, but they also signify the end of a relationship. A real estate attorney may be helpful in facilitating communication between the parties.
In many instances, one party has been paying the majority of the maintenance expenses of the property and residing on the property while the other party is not residing there, but also not paying any of the ongoing expenses of the property. Consequently, the party in possession of the property believes that he/she should be compensated for paying all the expenses and the other believes he/she should be compensated for not having use of the property. In order to reconcile both parties’ competing interests, the Courts have established general rules regarding partition:
1. On a sale of commonly owned real estate, an owner who has paid less than his pro-rata share of operating and maintenance expenses of the property, must pay over his/her share to the co-owner who has contributed more than his pro-rata share, and that is true even if the former had been out of possession and the latter in possession of the property.
2. The fact that one tenant in common occupies the property, and the other does not, imposes no obligation on the former to make any contribution to the latter. All tenants in common have a right to occupy all of the property and if one chooses not to do so, that does not give him the right to impose an “occupancy” charge on the other.
3. Notwithstanding those general rules, when, on a final accounting following sale, the co-owner who had been in sole possession of the property demands contribution toward operating and maintenance expenses from his co-owner, fairness and equity dictate that the one seeking that contribution allow a corresponding credit for the value of his sole occupancy of the premises. The party seeking the credit for the other’s occupancy of the property has the burden of demonstrating the “actual rental value” of the property enjoyed by the occupying co-tenant because ordinarily the cotenant who is not excluding others is not accountable for use and occupation.
Thus, what a person’s interest in the property is for purposes of partition varies depending on the facts of each case. Even though there are general rules, because partition is an equitable matter, the decision in each case is up to the sound discretion of the judge.
It is very important to seek the advice of a qualified real estate attorney who has handled partition matters. Each partition matter is fact sensitive and you need a lawyer who will vigorously argue on your behalf. It is also important to retain any documents related to the purchase and care of the property. If the parties have made any type of agreement with regard to the eventual sale of the property, the agreement must be in writing.
If you have any questions about partitioning a property, please do not hesitate to call us.